Tax Law (Questions About Taxes)/Multi member LLC

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Question
Hello. I own and operate my own taxi cab (independent contractor with cab company) and decided to operate as a multi memeber LLC. My wife is inactive in the business but I believe that IRS will tax us as a partnership. Here are my questions. 1. How do I pay myself? 2.Should I operate as an independent contractor under my LLC or should I establish a salary for myself? My wife is an inactive member.....can I simply apply to be treated as a single member LLC for tax purposes?

Answer
Wardell,

Thanks for your question.  I can answer your specific questions, but they indicate to me you need ongoing professional advice. I suggest you employ the services of a competent CPA or Enrolled Agent.

If she is a part owner of the business you must treat it as a multi mr brat LLC, probably filing a Form 1065 as a partnership. If she's an inactive member, why not remove her?

You can't be an independent contractor in your own business, and you can't receive a salary as an owner of a partnership. You can make periodic withdrawals from the business, which reduce your capital account. You will pay taxes on the profit earned by the business regardless of your level of withdrawals. Profits add to your capital account.

Hope this helps

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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