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Me and my husband have formed an LLC company in DE which will be conducting construction business in VA. We will be registering it as a foreign LLC in VA but how will we file taxes is my question. First we are both members so we will be filing as partnership. But will we have to pay taxes in VA and DE or just VA for conducting business there? Also we should still be filing our personal income taxes but also file taxes for the LLC right? How does us having this LLC affect our personal taxes? Do you think Turbo Tax is a good way to file our taxes personal and business?

Thank you in advance

VP

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4 Answers

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Unless you are doing business in DE you don't pay DE income tax.

LLC are pass-through entities your LLC income will be shown on your personal (or joint) tax returns specifically on the Schedule-C.

I wouldn't do your own taxes until you are more familiar with how the things you have setup work and are regulated. A good accountant will charge about a grand in your situation. Consider it money well spent.

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Partnership taxes don't go to schedule C. – littleadv May 22 '12 at 22:40
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You may not have to pay income taxes in Delaware if your business operations are in VA, but your LLC will have to pay Delaware Franchise tax. See here: http://corp.delaware.gov/paytaxes.shtml.

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I agree with answers above address the DE-VA issue.

Regarding federal income tax, since you are a two-member LLC, yes you will report taxes like a partnership but you will still need to file your individual income tax returns and pay your taxes via the latter.

Although the LLC must file a tax return, the LLC owners report income and pay the taxes owed on such income using their personal returns. The LLC itself does not pay taxes on its income. (At this time, the IRS has not developed a separate tax return form for LLC, so the same form used for partnerships is used, Form 1065.) The owners will each file a Schedule K-1 with their personal income tax return, which will show their ``share" of the LLC income. Source: http://www.tannedfeet.com/llc.htm

Fyi: The partnership files an information return with the IRS on Form 1065. Then a Schedule K-1 is prepared for each partner, showing the share of the profit/loss of the partnership. The K-1 is filed with the partner's individual return and the gain/loss is shown on the partner's Form 1040.

Source: http://biztaxlaw.about.com/od/taxesonbusinesstypes/f/llcincometax.htm

List of LLC-relevant forms (choose the ones cited in the article above): http://www.irs.gov/businesses/small/article/0,,id=158448,00.html

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Thank you all for the answers...I think it is all clear to me now. – VPIDOVA Dec 22 '10 at 18:11
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First of all did you incorporate LLC as “pass-through” for tax treatment (on my opinion yes)? If yes your LLC will have to pay Delaware Franchise tax, all of the business profits and losses will be taxed on on yours individual tax returns. Plus I advise you to find out what are requirements for DE LLC to conduct business in VA! Here you can find some additional informations: LLC DE

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