Miami, FL asked in Business Formation for Florida

Q: I am starting a single member LLC in Florida. I want my personal and business tax to be separately filed. What form?

I believe I need to fill out up for an 8832 but not sure what to select.

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1 Lawyer Answer
Michael Ray Smith
Michael Ray Smith

A: It depends on what you mean by having your business tax and personal tax returns filed separately. The following answer has some information that you appear to already know, but I'll give a full explanation for those who don't. The answer you're likely looking for is at the end.

There are three possible tax regimes for a single member LLC:

1. Disregarded entity. For income tax purposes, it's as if the LLC doesn't exist. All the business income, deductions, etc. go on your personal 1040, essentially as if you were a sole proprietor. Disregarded entity is the default. You don't have to file anything to elect it.

2. S-corp. The business tax information goes on Form 1120-S, which is separate from your personal 1040. However, the tax items (income, deductions, gain, loss, and credits) from the business pass through to your 1040. So even though all that is reported on 1120-S, the information ends up on your 1040. Furthermore, the business itself doesn't pay income tax; you pay tax on the pass-through income. To elect taxation as an S-corp, file Form 2553.

3. C-corp. The business will file Form 1120 and will pay income tax at the corporate tax rates. That information will not appear on your 1040. If you receive distributions from the LLC, you will report that on your 1040 and you will pay income tax on them. That's the so-called "double taxation" that causes most LLC owners to avoid taxation as a C-corp. However, there are circumstances under which that can be a good choice. You are correct that you need to file Form 8832. When you say you're not sure what to select, I suspect you're talking about Part 1, line 6. Check box (a), "A domestic eligible entity electing to be classified as an association taxable as a corporation."

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