The default taxation status for a Limited Liability Company with two or more members is a “Partnership” taxation. That is to say that the "Partnership" does not pay tax on its income but “passes through” any profits or losses to its members.
The LLC will need to file IRS form 1065 which is an information return used to report the income, deductions, gains and losses from the operation of the partnership. This return includes a K1 form which is then given to the members so that there share of the income can be included on the members tax return.
If an election is made on form 8832, the LLC may elect to be taxed as a "C-Corporation". (this is an elected status) that is extremely popular with many of our clients. This gives the LLC the ability to retain earnings and pay corporate taxes without the IRS requirement of having any employees since the LLC does not have individual directors and officers instead it is manager managed by our nominee manager service.
Once a C-Corp election is filed, form 2553 may be filed to elect status as an "S-Corporation"(Flow thru taxation) . (Elected Status)
