I've asked my CPA, but what to hear back.
Before I hear back, I wanted to know how some of you who may have gone through a buyout of a partner on how to correctly place the company income to pay him in quickbooks and later for taxes in Turbotax. I know there are probably some other forms such as a final partner return, and applying for a new EIN number with the IRS. His K-1 will need to show the income, obviously, since it was income. But just curious what I'm in for, so I'm somewhat prepared.
Ken
Why would you want a new EIN number? Are you creating a new firm?
No, I had heard since it was set up as a partnership LLC, and now it's a single member LLC, that the IRS would wonder why it's still set up as a multimember LLC and throw a fit. At least on the State level you can change the type of LLC. I ask my attorney and he says don't change anything...the IRS won't care how your company is set up. Just that the income is being shown on the K-1 form for the end of the year taxes.
From the outside it almost looks like he is more of the business end of things than you are. Is that the case? Maybe you can take two accounting courses and a tax course and start getting up to speed so that the company can remain successful. Do you also need to take a marketing course? There are many ways to structure a buyout and it appears to me that you may need some help with that. Nothing wrong with that, but you need to become the businessman to keep the company going. I hope you have a bookkeeper who maintains the quickbooks and turbotax. Learn how to read the reports and adapt to what his happening on the outside. I am nervous about your buyout and the long term status of the firm from the little you have told us.
Boy Luke, lets not jump to conclusions on here and pretty much call people fools. You don't have all the details, and that was by design. My attorney who structured the buyout did just fine with that, it's been taken care of. My bookeeper mentioned I should re-structure the LLC to a single-member LLC--my attorney does not agree. I thought I'd ask around to see what others in the professions knew who may have come across this similar thing. Only stupid questions are the ones not asked. I've run a business for 10+ years, thanks, us little guys do ok too.
I probably varies from state to state.
I had a 2 member LLC in Utah. All I did was buy the other member out didn't need to change anything with the state other than show it now as a one member LLC on the annual renewal. You would need to send K-1's for the final year. I'm in Utah.
Then the tax guy told me that one member LLC's can file directly on the member's individual tax return and suspend doing K-1's. So things can get simpler with one member LLC's.
Thanks for the info...that is good to hear your experience wasn't too bad. I just heard an hour ago from a CPA that I did a survey for a few months ago, and he assured me it was pretty easy to take care of. He was going to take care of it for no fee. I guess I did a good job on the business side of things and treated my him right. We're going to meet up tomorrow to get it all figured out, maybe I'll buy him lunch. I'll let you know how it goes.
Ken, Glad to hear you are set up, experienced and going! There are so many surveyors and engineers around who somehow think they can make it in business if they are a good surveyor or engineer. I agree with your attorney that you don't need to re-structure, but am not familiar with the Washington Laws. Again, my compliments on your business knowledge and ability.
