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get money I'm working on one of our businesses starts and I'd like to show you if we want to file your own taxes your own business tax how you'll do it and this tutorial is going to be for 1065 that's form so if you own an LLC and you're fast 1065 you start your business last year 2019 and you have not generated any revenue or we generated very little and you want to find your own 1065 I'm going to show you how you can get it done yes you can get it down if you don't have a lot of ability to report and you don't have any software don't want me if you don't have any types of work accounting software that you use and you want to get your own test time so let's get started and this is going to be for a real estate business that we created in 2019 and we put our capital contribution in a Serie one we are waiting to find the property we want to invest in so we are going to applaud their interest that the money earn in the CD account but other than that we have not generated any real estate revenue in that business for the business to report so it's just going to be like if you was a portfolio income [Applause] and I have my 1065 here Missy if I already open it or not probably not okay so as you can see when you have 1065 to file for this business you put the name of your business here on top you'll put the date in fact you to put your federal identification number here you put it date the business started and pretty much our credit I found with the state myself and those the dates that are far I was granted the same day so the business promised re the same day so I put a date down and usually when you apply for your federal identification number they'll ask for the month and the year but when I'm polymerases I just like to be more specific and putting dates that they state allow the business to start or approve them they start reading a study state approved and this session is not required for this specific business but I like to track it so I put the amount down and this total assets is day capital contribution added the interest that it generated and society i swatted out of these out of the capital the original amount they are month it costs me to file for the business they certification of organization so the certificate of organization so the it costs $50 for our state to find out with the states so as sue said that there are of the amount as well so does promise that all assets of business right there and this session that's it we can talk about this session little bit so let me see if I have the instructions open here it's good to read the instructions each time I read this in fact I like to read iris its performance instruction so al-ankara Bey arived I don't see does this one that I have not known in yellow in this so let me see if I can find another one that I highlight okay so it could be this one because I'm just like I should be seen more of highlight here let me open another one unless I didn't save a properly I see here farm farm farm probably I didn't save it okay so as you can see in the instructions there is this if I were to find a natural highlight no you are Indian sources is going to just highlight those information that you find interesting so that you might go back to later and here why am I looking for that's the business and see so promise quickly I can go back there but what we are going I can point out something here the filing dates if you are filing 10cc 502 request an extension issue by March it March 15 so and I believe for 2020 2019 2019 return is you by much ceasing so probably something happening too much 15 to be chained to much the same so a lot of time one is falling under 15 and we can our holiday art in the hope they'll change it so it might be a reason I'm not going to be opening the calendar to check but one we are going down let me point out something here electronic filing so let me see if they okay so here you see if you are required to electronic file or if you can paper file so as you can see here if you have more than hundred partners in your LLC you will need to file an you need to file your taxes there's nowhere I run it but if you have less than that you have the option and when you have the option I will that's just my opinion but I will suggest you pay per file because when you file your information is there as long as I resort to keep it but when you pay per file easily they keep it for three years and then it's destroyed they were destroyed those are returned so the choice is yours so let's move down when I get to this session where to file I like to quickly locate my state and it will tell you what category you fall under so if you are reporting all your you have less than ten million and you another car to file m3 you look for your stage and you use the address our correspond to that so and in this category here so what I like to do is I will grab an envelope and I will write this address on it so I know that you know that's the address that I'm going to use so that's how I like to get ready when I'm working on my taxes I will grab an envelope and I'm to date as I pressed on it so that's what I recommend you do as well and let's go down again and make sure when you file your taxes as the CEO or the president the owner of the LLC you'll need to son your return so we will come back to cash and accrual voice now why we are here let's get down to a and see and if you are filing your taxes is good to sit down and read through this we might come back and little bit talk about few things but probably I should be talking about when I'm moving down ok so here so that I don't forget about Dawson that I wanted to share with you so here is a and C so pretty much what they advise ian is you will write down you know your business activity under the number what they have a and you look up the code and you'll apply the code so they give an example here so if you buy you purchase raw material and hire people to make a finished product for you and you own the finished product you are a manufacturer so you'll put manufacturer under a and under C you can put any color within this range so let's go look for de code I'm not sure we have the code on this phone so let's go look for the code and you'll find the code for sha under k1 let's see if I have k1 here in fact I should have any k1 because my got volume 10 SEC 5 5 k 1 I'm not sure it is with the firm though I think you'll be with the instructions but let's go down and see no it does not have it so let's go back to our many structures and scroll down to see if we have the hood at the bottom I think he should have the code so let's go today yeah we do have the code here so on your 1065 at the param probably page 55 is where it starts so on page 55 you'll see the code so as a manufacturer you have from this number here two three one one nine hundred here to choose from and in our case that's the real estate so we didn't want to get too specific so let's look for real estate here and that's a real estate in this session here so they have real estate and rental renting or leasing so they have all those options and I could easily choose 53 1 1 1 0 but it will be too narrow because that one is for dwelling of residential properties which we will start live but I went and isolated selected the last one which is more vague giving me more option if I wanted to get into other activities within this range just you know within these categories here those categories here without being too specific so I selected down on so let's get back to our form which will be this one so you can see here we have real estate simple if we go back to that as a session so we have real estate that's the principal activity our business activity real estate without being too specific and then we choose the last called other real estate or other related activities or something like that I see how they even said so other activities now the one that I highlighted the number is 52 we won 390 other activities related to real estate so that's the code that I chose and you put your address your city and state and zip code so when we move down that's the initial realtor that's your first year filing a return of all your business that would be initial return you'll stay like that and cash or accrual so I selected cash because I have another real estate business and isolated - so in case I wanted to merge both I'll run into some issues that I had to find a firm to ProQuest IRS to request providers to switch from one to the other so I select a path but usually you select a call if you are managing inventory and promise the difference between cash and accrual on these instructions is little fake in all of a is more confusing keep in mind that IRS when you're written IRS instructions it can be very confusing sometimes but per much cash method is the way our pool is when you sell something or one one you sell an item and the consumer aid but it has not hit your bank account you will record the revenue because you earn it even though it has not me see yeah it has not hit your bank account yet but because let's say you are selling honesty and it would takes a few days before as you would transfer the money to your bank account you earn the money you owe recorded if you purchase an item and you have not paid it yet you don't recall that expense in that year so if you if you pay with credit cards yes your recordable if you have not paid you won't record it so that's the cash method you pretty much a record the revenue if you earn it and record the expenses Nomi actually paid for essence I have a business that is in it that is a trading business so when I didn't pay my tax my FICA ad he sell it to the IRS by December 31st as if account for that space in my 2019 return when I was filing it because I was using cash metal and that's one instance that are called easily use the accrual method so now let's talk about accrual method they are crude you are crew and expense if you think you'll pay by the end of your test year so if you purchase something and you are going to pay it you'll upload our expense you will pretty much account for it if you sold something and the customer paid but you have not received it yet you won't report our revenue so it's little bit basically ended up a crew and cash there are little bit opposites when it comes to revenue and expense so just keep that in mind and you switch on you think it will help your business so let's just trying to show you where they're talking about it but it was a little bit more confusing well we might come across it when we in fact it should be more up but yes you'll find it in the instructions here as well and that's the accountant mate order unless you who is allowed to use what so a partnership may use the cash method of accounting that's here unless it is required to maintain inventories has AC cooperation as a partner or is it a shelter however for Dasia beginning after 17 2017 any partnership qualifying for as a small business tax failure may use the cash mentor and I say a small business I think is if you are making there is some minerals involved so let's not go looking for the boss should be to find some way down here who they cut they qualify as a small business but that's that you have the option between the two and they explain a little bit the cash and the accrual method here as well and it is don't be surprised if you find a little confusion I have more questions after you read it and they explain the accrual here generally an accrual basis taxpayer candida occur expenses in the past year in which all event are determined a liability have occurred the amount of the liability can be figure figure with reasonable accuracy and economic performance takes place with respect to day space so well you can really Darren see what that is and they will talk about the revenue the income as we're here so let's move on to the next session once you have that you'll make sure you you numbered how many partners you have in your business and since is a real estate business but you have not generate did any revenue we will recall our interests that we earn on our investment and keep in mind if you have a real estate business you are now going to file you are not going to fill up this session so Tennessee c5 has a section on the first page for businesses which are the real estate business owner you are not going to fill up fill out so here is for trade and maybe we should talk about what is red what is not so is a trade or a business this session which one so you are not going to fill it up but you'll come back and you'll pull your name and pretty much one of my businesses is during the tax for this business so that's why I'm doing up the paper use only session if you Arjuna for your own business you leave this space blank but you will point them rough turn out when you are done you Sonya you're dated either way our printed out and Alice Tony and all that but I will or sunny here as well if that gives me the option yes Arizona here as well and area so if you are if they preparer and you are finally for somebody else for a client like my case here you will put your business information hear your name you will stand when you printed out your dead you put your PTN here if you like self I probably will fill up here but if you have a business then you will leave that self-employed session alone blank you'll put your identification number here and your phone number here and if you the business owner allow the tax preparer to discuss your tasks issue with IRS that'll be yes here but if you Arjuna yourself for your own business you leave this paper power use only session blank and you just select no here if the IRS wants to discuss something they're discussing with you the owner the president they say or the boss so let's move down here and one this session B which is on page two is just questions here so here you'll put down you select domestic liability company LLC promise that's why it means if that's what it is and you read those questions so most of them will be known in your case and in our case because that's just two people partners well that means we own 50% of the business each one of also if any individual directly or indirectly on an interest of 50% or morning the profilers of capital of the partnership the answer is yes so you have to fill up Schedule B one so let's go to Schedule B 1 and walk on that before we come back here so you go to IRS website and you'll pull up Schedule B 1 and maybe what I will do I'll put the schedules on my website in case is confusing for you to find those schedules IRS website but as scheduled I believe I open it before that Schedule B 1 here so you put your business name down you'll pull your identification number and this schedule is very easy to use the first session is if a business is owning the business and have more than 50% interest in it but if that's you owning your business more than 50% you just come down to part 2 and part 2 is for individuals and steps on in more than 50% interest in the business so you write down your name your SS number your social security number you'll write down your citizenship country and they they share of your ownership and if you go down it will have some instructions probably to explain it to you in what it is you should fill up on one and work in Xalapa too so we can Joseph really through to see is it's very easy to understand when you release night on TV star confusing but that's pretty much it but maybe I can point out something here in case a business of yours is owning another business is important to be a good one so if you have a cooperation aid if you have a corporation a owned in the commercial be a partnership B and the cooperation a on directly an interest of fifteen percent in cooperation in partnership C and partnership be on 70 percent of partnership C so that means the cooperation a on more than 50 percent of the cooperation C and that's how he works so 50 percent of a on 50 percent of B B or 70% of C and a or 15% of C so 50% of C 50 percent of B when B on 70 percent of C so that is very much 35% that a own indirectly have interest on C and you have 15% on top of it so 15 percent and 50 and 35 percent is pretty much how much 50 percent so how they figure that 35 percent let me see if I
can remember how I figured out myself so if B is owned in a seven seventy percent of C and your 50 percent of be half of 70 is 35 that was pretty much what it is so let me indirectly your own 35 percent of C and you own 15 percent of C directly so that make a 50 percent of you or of cooperation a owning the rest Li and indirectly partnerships C so the cooperation a will flow past one if it's a formation so that's pretty much the way it works and then Part B which on 70 percent of C will fill up will be pulled on part one as well anything that owned more than 50 percent will be listed so that's how you fill up a Schedule B and there is nothing to sign on and just be robbed you print it out so it will be added to your it will be attached to your phone when you are pointing things out to mail so now that we are done with Schedule B let's go down so you keep reading you know there is more involved with if you have interest on businesses of the United States or our said international business has ownership of your business so those are things you are going to read to and say no oh yes and there is another instance here when your answer will be yes does the partnership satisfy all four of the following one your receipt for the year is less than 250 thousand dollars if that's yes then that's one so and then the partnership total assets is the less than 1 million in schedule k-1 filed by the to date so they are due by March 15 so if you are filing your return and you know you are going to set it in by March 15 the answer is yes and technically you're supposed to give k1 to your partner's by the end of January but the due date is March 15 so if you are filing your return which can want to be added to by March 15 or by the station date is yes for the answer the partnership is not filing it's not required to file scheduled Emma the problem there is probably yes we can go look for that later but that would be in the instructions about is yes and if all your answers yes then you don't need to tell of scheduled till access that your L M 1 or M 2 or even F on page 1 F is where we put a total asset of 22,000 something dollars so you are not required I put it there even though it's now quite I'm not required to fill up that session for this business and then you move down I think is really that be those two area that areas that you have yes and most of your answers should be known and when you come down here you need to put your name down unless you dis needed a business to be your PR so you put your name down on your address and your phone number boy if it is near a business then you put a business name the business address and the business phone number and promise anything else will continue to be known so if you have a real estate that's scheduled K that's your vinyasa work or to a my probably splint in another video but this session for our instance we didn't have any real estate revenue but we have interest revenue that we wanted to record so and that would be because the money is in the city are generated eleven dollars five interest income is where we put it but as you can see here if you have a business and I have a video on that already when you have tens I think I wonder I have is 1065 for a newcomer portfolio so a portfolio income so probably am I probably do time since if I for a forest with as well to show you how you will fill up if you have business but in this case it real estate for if you have it real estate and have real estate ribbon of real estate information you will use form 88 25 which you will fill up route pull those information from there to this here so we have revenue that we put down here for interest but you can see that there is some rental rat if it is expenses involved here and for all other gross rental incomes there with the three sessions here granted payment you have interesting call which we filled up you have dividend session you have royalties and Nan short term gain if you have your in investment so probably you will fill up at arm then you see c5 Schedule D and you put those information here so many of the panel that switches you are in you not a phone and you pull the information in the bottom of the total information here income or loss so we have that 11 here and those are foreign transaction session I will go down to the deduction session here Missy other informations do they have yeah so they have deductions yes and they have the Dawson's here if you have a deduction that were under this category you know put it here and after the income you fill up this session and I didn't have anything going there but when we move down here is the thing so other information 18 non-deductible expenses the $50 to file the LLC with the states a port under that session is non-deductible if they start of course is an organizational cause but it's not deductible because the business is real estate is a passive income business so I cannot see dot my startup costs if the business is in the trade or business has active is an active business are there two T dot dots and I'll go under deductions here even better it will go under other items here under twenty here for the Dawson so that's done before at this case even is not deductible and when we move down we for the next session for k1 will have the total thus promised the total income minus the expenses on the page above for k1 and dark easel and here we are limited partners individual passive we put it under under that and that's 11 but you need to read the instruction because this idiot a bit confusing and sometimes you wonder if you should use individual active but those two will be your options if your LLC's but we can get to that later so pretty much your schedule your tennessee c5 is done you don't need schedule L M or M to to fill out but I like to fill out schedule l myself on a spreadsheet for my own record and in our session in our linear should put it out but in our error case because the business started this year the beginning area I have zero and the end area I have how much my balance was for the business maybe I should pull that form out little Missy from case I'll forget let's get back there probably the building accounting schedule schedule air and thus my schedule Ella here that's it I may not be a curator Missy here I need to change that why you didn't serve so does the word evil look the king of the past year I didn't had anything there and at the end of the test year that's what I have let me see it does said what is in it so it's pretty much what we invested it's now what you should be showing me here though unless I save another version but I need to adjust my spreadsheet here Buzzard so that's the ended year and when we come down so pretty much your balance your your assets and your liabilities they should match so beginning of the year and end of the year there should be the same numbers if they are not so you might have to adjust something so that is missing what a foreign capital stock so I didn't know how to fill up much for this one is just the cash and the capital session receive it but there is another one Missy file here I have two okay so probably I walk on this one yeah so this day is the updated one so that's pretty much what it is that's the amount but it has more well mine into a here so that little I can't remember how we started but that's how you fill up your schedule l is not much where at least for our case here and it will match our capital contribution as well and that's one form and it's very important when you are finding your task is to keep your expenses well organized there is another form here that I lied to I like to organize as well and probably this one might give you more insight for this business but pretty much that's how we started so it just m2 the schedule m2 that was in the form that we are not required to fire but I like to have it for my own record and as a practice you know when you are general yourself when you get to the millions revenue that you will have to file it off you have to figure out you know how to do it so pretty much the m2 is tracking your transaction toward a year in in a way when your schedule and is more like your balance sheet when is you're swapping your your financial states at a specific time of the year at the beginning and at the end the schedule M is more like tracking everything 20 here so you have the beginning of the year which is zero for our kids but then this contribution went in and they were right to do it and I to have partnership share on the side as well to go along with it so that's that is calculating napadas de contribution and as the interest that it generated and here I have my deductions and this schedule am i schedule mo m to a telemetry but I try to add more to it to fit my need so don't not earn the rose well originally so this and I just look at it iris version and use that to design mine so that is layout the same way about with more information on mine so here the decreases I have the 50 that we pay the state and and then I just have all those formulas are out to track to do the calculations for me so does promise the income session minus the expenses session and I'll give me the balance at the end of the year and the currently increases is just pretty much the interest what I generated during the year - what expenses I incurred during the year and to our team the whole Vernal during the year and the expenses so the recession and the Perim through much this one and that one they are pretty much the same in different ways so that one is taking the beginning a balance the contribution during the year and the current year increases or decreases as giving me that and when the top one is taking the total in and increases - the total expenses and thus very much it so I like to work on those two spreadsheets so that I know how much is my assets my revenue my total assets which I put on f let me see how our F is design here I think F is little less am i right so 20 0 50 sees what we have down here the dawn is this 1 2006 e ya put on my 2000 CC 1 2006 e 1 is like $4 difference right something like that 4 5 ok so this is the amount and I believe I fill up this one before I won and I I just I put it here before I won and I make those adjustment but my total I said is 2006 e of 2006 t1 so this needs to be adjusted and I can even adjust da don't allow me to download require me to save it again so yeah that's that that's how you calculate your total I said at the end of the year to include so now that we are done with pretty much we are done with 1065 when you fill it up now less you look at then schedule k-1 because when you are done till of k schedule okay after you fill up a 1065 or schedule k that is in 1055 you need to fill up your schedule k-1 for your partners so let's get back there and that's the schedule Kim one and under schedule k-1 you will list your business name your business identification number where you are sending the return and your partner's so what i like to do is because these two partners anything you'll be likely three the same if that's the case you will fill up everything without the information here and then you save it and just pull out the sheets and you put information in there for the partner so one partner social security number will go here they are addressed and the partner's name will go here and you will select LLC if both partners are member manager damning as an analyst above partners can manage the business you are not hiring somebody to manage the business for you your selection because your LLC could either be member manager if you the owner is managing it yourself it could be manager manage yeah manager manager LLC if you are hiring other people on payroll to manage your business so we'll select G here and is a domestic partner so we'll select that as well and as we move down we put our shelves here so 50 50 50 for everything profilers capitals that's how we set it up and you know fill up that based on your situation and when we come down here that's for one person so let me put the total here there'll be the rotary and if I still have my believe I still have it on here you're good to see here since I'm tracking the partners share on the side you see the pattern here you see that number so that's the number eleven of the rotary from one person so if we go back and we are not required to fill it up either based on the revenue made during the year but I like to attract a sort of fill in at all so you'll start with capital consider during the year and that's the beginning account capital account is zero capital contributed during the year is 11 0 15 if we go back to this spreadsheet we should be too funny here and then the deduction you'll see that amount here is the share of the partnership of interest - the expense that give us about $20 so if we go back we'll see that $20 here under current year new income or loss and promise with intake it does not other increases to attach anything so
