How to file tax return for partnership/LLC?
We (3 of us lives in different states) started a new partnership/LLC company in Maryland in 2006 (one of us lives in Maryland). We had a few thousand dollar expenses (for equipments) but had no income nor any real business in 2006. We need some basic knowledge about filing the tax.
1. We do not have any accounting person. Do we need to hire one or it is pretty simple and we can do ourselves?
2. What software we can use?
3. When is the deadline for filing federal and state tax?
4. Any other suggestions?
Thanks.
February 1st, 2010 at 4:11 am
1. If you can figure out how to use accounting software like Quickbooks, you can do it yourself. For your tax return, you could probably do it yourself as well.
2. Use Quickbooks for your accounting/bookkeeping, use Turbo Tax Business for your tax return. Since it is a partnership, you will need to file Form 1065.
3. Partnership returns are due on the 15th of the third month following the end of the fiscal year, which would put the due date at March 15, 2007. You can file for ONE 6 month extension which would push your due date to September 15, 2007.
4. Partnerships are considered pass through entities, so you do not pay income tax on the income the partnership earns during the year. The earnings of the partnership flows through to the partners and are reported on page 2 of Schedule E for the indvividual returns of the partners. Because of this, you need to have your partnership return completed before you (and the other partners) can prepare your individual tax returns. Also, partnership income is considered self employment income, so when you file the partnership income on your individual return, you will need to pay self-employment tax on your distributive share of the income of the partnership.
February 1st, 2010 at 4:11 am
You should hire a tax professional to assist you instead of posting the questions here to save money.
Unfortunately, too many people commonly set up companies without knowing about the tax consequences of their actions.
Anyway…
You can prepare your own tax return IF you are comfortable with doing so.
Any tax software will do. Remember that it’s NOT necessarily the softwares fault. The software primarily summarizes and categories the amounts based on the user’s input. Garbage in, garbare out!
Which state is the business actually located in? Many people can register their business in ANY state but actually do business in another state. Many people incorporate in Delaware (since DE laws are more “liberal” than some other states) but they operate their businesses in other states.
An LLC can CHOOSE to file as a partnership or a corporation (i.e. Check the box rules). The type of entity will help determine many factors such as the filing deadline (Generally, most LLC’s file as a partnership).
EACH state has Different laws regarding LLC’s so you MUST be familiar with the laws of your state.
A tax professional can assist you. Better yet, if someone (i.e. your attorney) helped register your LLC papers, ask that attorney for tax advice! That’s what you paid for!
February 1st, 2010 at 4:11 am
i would not recommend you to prepare a partnership tax return if you have no experience. i would suggest that you get software like Quickbooks to keep record of income, expenses, etc. you would then provide this to your accountant who would prepare the tax return. the deadline for a partnership tax return is April 15th, assuming you have a 12/31 year end. you would want to prepare this first as you would receive K-1s from the partnership that are recorded on your personal income tax return.
a partnership tax return requires a balance sheet as well as income statement. if you are not familiar with these accounting terms and financial statements, i would suggest getting an accountant. then maybe next year you can use what your acct did as a guide.
you can probably file your own individual tax returns. turbotax is pretty user-friendly and easy to use.