Duluth/Gwinnett CPA on S Corporations, LLC’s & Partnerships
S Corporations, partnerships and Limited Liability Companies (LLC’s) are all considered pass-through entities. Deductions on these pass-through entities are sent through to the partners or shareholders and then reflected on the individual owner’s personal return or Form 1040. A single member LLC will reflect their business operating results on their personal schedule C as part of their personal return whereas a multiple person LLC will:
-If being taxed as a partnership file IRS Form 1065 and then receive a K-1 reflecting an individual owners respective share of profits, which is then reflected on an owners personal income tax return.
-If being taxed as an S Corporation file IRS Form 1120S and then receive a K-1 reflecting an individual owners respective share of profits, which is then reflected on an owners personal income tax return. LLC’s can do a tax election if they follow the rules and guidelines thereof converting the LLC to an S Corporation for tax purposes, while remaining an LLC for legal purposes.
You will receive information returns for pass-through entities such as:
Partnerships and S Corporations will issue Schedule K-1s. These are used to list items and amounts you have to report and helps you to find the schedule of the personal return and what lines to use.
As an Atlanta CPA I have learned that selecting the right entity is one of the most important financial decisions you will ever make in the life of your business. To make sure you incorporate well see http://www.hiscpa.com/incorporating-articles.html
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