Know Your Options for Reporting LLC Income for Family Businesses

When it comes to reporting business income, LLC owners have more choices than they probably know. Most choose one of the following three familiar options: 

  • a single member LLC defaults to a disregarded entity on a Schedule C;
  • a multi-member LLC defaults to a partnership;
  • or an election is made to report income as an S corporation.

Although the options above are most common, two others exist that are often not considered.

First, if more than one individual owns an investment outside of an LLC, and there’s no operating activity other than managing the investment and distributing the net income, the relative shares can be reported on the appropriate Schedule B, C, D, E, or F, based on the type of income generated.

Second, if the property is owned by an LLC and the only members of that LLC are husband and wife, it can be considered a qualified joint venture and reported as if it were a disregarded entity. This option then eliminates the requirement for filing a partnership return each year.

If you and your family business need help choosing the option that’s best for you, call or Email Patrick and Robinson CPAs today: 904-396-5400 or Office@CPAsite.com.

 

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