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How do I correctly fill out a W9 tax form as a single member LLC?If your SMLLC is a sole proprietorship/disregarded entity, then you put your name in the name box and not the name of the LLC. You check the box for individual/sole proprietor not LLC.If the SMLLC is an S or C corp then check the box for LLC and write in the appropriate classification. In that case you would put the name of the LLC in the name box.
What tax form do I need to fill out to convert from single member LLC to multi-member LLC?When you add a member to your previously single member LLC (which you can do structurally by amending your operating agreement and filing an amended report, if required, with your secretary of state), you cease to be a 'disregarded entity' under the applicable Treasury Regulations.Going forward, you will either be a (a) partnership, by default, and will have to file a partnership income tax return on Form 1065, or (b) a corporation, if you so elect, and will have to file a Form 1120 if you are a C corporation or Form 1120S if you elect to be taxed as an S corporation.There can be other tax issues as well, and these need to be addressed with a business CPA.
How do I convert a single member New Jersey LLC to a New Jersey C-Corp?You need to do some filings, you need to re-confirm when is the best time to do the conversion, you need to have proper internal (to each company) signNowwork, and you need to calculate the tax consequences.Below is a collection of wisdom from Google - since it’s not any kind of tax or legal advice, you must reevaluate it yourself for accuracy and reasonableness or retain a competent professional to consult you on this.The details of how to convert your New Jersey limited liability company (LLC) to a New Jersey corporation will vary depending on your specific situation. However, here is some general guidance on the process of conversion to a for-profit corporation. Because the tax consequences can be signNow, you should consult with a tax adviser before undertaking any conversion.Statutory Conversions vs. Statutory MergersAs an initial point, be aware that there is a distinction between a “conversion” and a “merger,” and more specifically between a “statutory conversion” and a “statutory merger.” A statutory conversion is a cheaper, quicker way to convert an LLC to a corporation—largely because you do not have to form a separate corporation before the conversion can occur. However, New Jersey is one of only about fifteen states that do not allow statutory conversions of LLCs to corporations. Instead, New Jersey only allows statutory mergers. Unlike statutory conversions, statutory mergers do require you to form a separate corporation before you can convert—or, more accurately, merge—your business.Notwithstanding the distinction between statutory conversions and statutory mergers, “conversion” is a more general term that can include mergers. In this article, we’ll use “conversion” and “merger” somewhat interchangeably, sometimes speaking broadly about “conversions” and “converting” your business, even though, more narrowly and technically, we’ll be talking about a merger.New Jersey’s Merger StatutesBearing in mind that mergers can be among the most complicated of business transactions, this section provides a very brief summary of the process of conversion-via-merger under New Jersey’s merger statute. As in most states, New Jersey has one merger statute under its LLC laws and another merger statute under its corporations laws; portions of each of these statutes apply to a LLC-into-corporation merger. For the most important parts of each of the two statutes, check Sections 14A:10-1 through 14A:10-14 and Section 42:2B-20 of the New Jersey Statutes (N.J. Stat.).To convert your New Jersey LLC to a New Jersey corporation via a statutory merger, you need to:create a new LLCprepare an plan of merger (a.k.a. agreement of merger)obtain LLC member approval of the agreement of mergerhave your corporation’s board of directors approve the agreement of mergerobtain shareholder approval of the agreement of merger; andfile a certificate of merger with the Department of the Treasury.Step 1: Create a CorporationCreating a corporation is a multi-step process. However, for immediate purposes, the key elements are preparing a certificate of formation and bylaws; the certificate of formation will be filed with the Department of the Treasury. Through these formational documents, the members of your preexisting LLC will also become the shareholders of your new corporation. For more detailed information on forming a corporation in New Jersey, check How to Form a Corporation in New Jersey.Step 2: Prepare a Plan of MergerThe plan of merger likely will contain items such as:the name of your LLCthe name of your new corporation prior to the merger, and, if different, the name of your new corporation after the mergerthe “terms and conditions” of the proposed merger, including a statement of any changes to the certificate of formation for the new corporation resulting from the merger (with such changes indicated in a restated certificate of formation filed with the certificate of merger); andthe manner and basis for converting LLC membership interests into corporate shares.However, because New Jersey’s merger statute for LLCs does not specify what a plan (or agreement) of merger must contain, you should consult with a business attorney regarding this document. (The items listed here are based on New Jersey’s merger statute for corporations.)Step 3: LLC Approval of PlanOn the LLC side of this transaction, the plan generally must be approved by a greater than 50% of the LLC ownership. For more details, check N.J. Stat. § 42:2B-20(b).Steps 4 and 5: Corporation Board and Shareholder Approval of PlanOn the corporation side of this transaction, the merger agreement must be approved by the board of directors and then approved by the shareholders. (For a small business, the directors may be the same people as the shareholders.) The rules for shareholder approval of the agreement of merger may vary depending on, among other things, when your corporation was formed and whether there are any merger approval provisions in your certificate of formation. In most cases, approval will require a simple majority of the votes of all outstanding shares entitled to vote on the plan, including a simple majority of votes in each separate share class entitled to vote on the plan, unless your certificate of incorporation requires a greater majority vote. However, because the variety of potential voting rules contained in the statute can be confusing, you should consider consulting with a business attorney for guidance. For more details, check N.J. Stat. § 14A:10-3. (Generally speaking, where the corporation is formed for the primary purpose of the merger, and the members of the LLC are also the shareholders of the corporation, it should be the case that all shareholders will approve the merger.)Step 6: File a Certificate of MergerThe certificate of merger likely will include items such as:the name of your LLC, the jurisdiction where it was formed (New Jersey), and its Department of Treasury ID numberthe name of your new corporation prior to the merger and the jurisdiction where it was formed (New Jersey), and its Department of Treasury ID numberthe date of approval of the plan of merger by the corporation shareholdersthe total number of corporation shares entitled to vote on the plan, the number that voted for the plan, and the number that voted against the planthe name of your new corporation after the mergerinformation regarding who will accept service of process on the new corporationa statement regarding payments to dissenting shareholdersthe effective date for the merger, if other than the filing date; andauthorized signatures.However, because New Jersey’s merger statutes do not provide clear guidance regarding mergers of LLCs into corporations, you should consult with a business attorney before attempting to file a certificate of merger. (The Department of Treasury provides a blank certificate of merger form online. This form may not be appropriate for use in mergers involving both corporations and LLCs.)Other Important AdviceIn short, not only are mergers generally complex transactions, often involving unexpected complications, but New Jersey’s merger laws are not as clear as you might expect. Therefore, as already stated, you are strongly advised to work with a business attorney to draft the required documents and otherwise complete the merger process.Be aware that New Jersey’s corporations merger statute states not only that all of your LLC’s property, as well as all of its obligations and liabilities, are transferred to the new corporation, but also that all rights of creditors against your business remain unimpaired by the merger, and any legal actions against your business “may be enforced as if such merger . . . had not taken place.” For more information, check N.J. Stat. § 14A:10-6—or consult with a business attorney.Apart from the items mentioned in How to Form an LLC in New Jersey, one other important step when undertaking this type of merger is to make sure that no business contracts or agreements, such as bank documents, leases, licenses, and insurance, will be nullified by your LLC’s conversion to a corporation.Tax ConsequencesThe IRS makes clear in a 2004 bulletin that, generally speaking, it will tax a statutory merger as though the LLC members formally transferred all LLC assets and liabilities to the corporation in exchange for stock, and then immediately liquidated the LLC. However, the specific tax consequences for LLC-into-corporation mergers vary from one case to the next. Because the tax consequences can sometimes be signNow, you should consult with a tax adviser before undertaking any conversion.Some Final ConsiderationsOur main concern here has been converting the legal form of your business from an LLC to a corporation. However, if you’re seeking to convert your LLC’s tax status from partnership to corporation without changing the LLC’s legal form, you only need to file IRS Form 8832 (to be taxed as a C Corporation) or IRS Form 2553 (to be taxed as an S corporation). (By default, the IRS taxes a multi-member LLC as a partnership and a single-member LLC as a so-called “disregarded entity;” there is no separate IRS tax category for LLCs.) While the IRS forms for changing tax status are fairly straightforward, do be aware that this procedure—known as “Check-the-Box”—involves special eligibility criteria; you can find those criteria in the instructions included with the forms.Keep in mind that certain considerations may affect the timing of your conversion. For example, if you are converting to a C Corporation in order to make your business more attractive to outside investors, you will probably need to convert before any investment occurs. Conversely, if outside investors are not at issue, but the specific nature of your LLC’s assets and liabilities will lead to an undesirable tax burden for the current tax year, you may need to at least temporarily delay the conversion.
How do I fill up EIN form as a non us citizen for single member LLC? That is confusing to me?I have helped dozens of international (non-U.S.) citizens obtain EINs for their entities and have blogged extensively about my experiences.It is understandable that you are confused. Although the instructions for Form SS-4 are relatively complete, some requirements may not be readily understood by non-Americans. Even more important, the IRS has certain policies, practices and expectations concerning foreigners that they don’t even publicize!I can’t take the time to tell you what to put in each of the dozens of lines on the Form. Instead, you should read Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S. It is long and detailed and reflects much of what I have learned about the process.I wish you the best!
How is a single-member LLC owned by a nonresident alien taxed? Should I fill out a W-8 or am I deemed not to have U.S. activities?Based on the facts as you have presented them:You are selling a product, as I see it, and not a service - although there's something of a gray area here, this is more like an intangible asset than it is providing a personal service for compensation. That product is being offered to US-based customers who are using it in the US - your focus is building up your market in the US, and you are doing that under the auspices of an LLC which is US-based. Looking at all of the facts and circumstances surrounding the conduct of your business, as you have presented them and as the IRS will look at them if asked, I conclude that you are conducting a business in the US and your income from US sources is effectively connected with the conduct of that business in the US, which means that you are subject to US taxes on that income.With that conclusion, Form W-8ECI is the proper form to provide to your US sources if you wish to prevent withholding on the income from your business.I want to add one point, since this seems to be coming up frequently - while an LLC is a disregarded entity for tax purposes, it is still a legal entity in the US - and the fact that you, as a nonresident alien, choose to operate a business under the auspices of a US-based LLC is a piece of evidence that can, under the appropriate set of facts and circumstances, be used by the IRS to support an argument that you are conducting business in the US and that your income from that business that comes from US sources should be taxable in the U.S. You should not assume that as a nonresident alien you have carte blanche to create a US LLC, operate a business under its auspices, and then at tax time argue that the income should not be taxable in the US because the LLC is a disregarded entity. The IRS will look at all of the facts and circumstances surrounding your business, including your choice of a US-based entity as the face of your business, and while that decision alone won't be dispositive, it will certainly be considered.
As one of the cofounders of a multi-member LLC taxed as a partnership, how do I pay myself for work I am doing as a contractor for the company? What forms do I need to fill out?First, the LLC operates as tax partnership (“TP”) as the default tax status if no election has been made as noted in Treasury Regulation Section 301.7701-3(b)(i). For legal purposes, we have a LLC. For tax purposes we have a tax partnership. Since we are discussing a tax issue here, we will discuss the issue from the perspective of a TP.A partner cannot under any circumstances be an employee of the TP as Revenue Ruling 69-184 dictated such. And, the 2016 preamble to Temporary Treasury Regulation Section 301.7701-2T notes the Treasury still supports this revenue ruling.Though a partner can engage in a transaction with the TP in a non partner capacity (Section 707a(a)).A partner receiving a 707(a) payment from the partnership receives the payment as any stranger receives a payment from the TP for services rendered. This partner gets treated for this transaction as if he/she were not a member of the TP (Treasury Regulation Section 1.707-1(a).As an example, a partner owns and operates a law firm specializing in contract law. The TP requires advice on terms and creation for new contracts the TP uses in its business with clients. This partner provides a bid for this unique job and the TP accepts it. Here, the partner bills the TP as it would any other client, and the partner reports the income from the TP client job as he/she would for any other client. The TP records the job as an expense and pays the partner as it would any other vendor. Here, I am assuming the law contract job represents an expense versus a capital item. Of course, the partner may have a law corporation though the same principle applies.Further, a TP can make fixed payments to a partner for services or capital — called guaranteed payments as noted in subsection (c).A 707(c) guaranteed payment shows up in the membership agreement drawn up by the business attorney. This payment provides a service partner with a guaranteed payment regardless of the TP’s income for the year as noted in Treasury Regulation Section 1.707-1(c).As an example, the TP operates an exclusive restaurant. Several partners contribute capital for the venture. The TP’s key service partner is the chef for the restaurant. And, the whole restaurant concept centers on this chef’s experience and creativity. The TP’s operating agreement provides the chef receives a certain % profit interest but as a minimum receives yearly a fixed $X guaranteed payment regardless of TP’s income level. In the first year of operations the TP has low profits as expected. The chef receives the guaranteed $X payment as provided in the membership agreement.The TP allocates the guaranteed payment to the capital interest partners on their TP k-1s as business expense. And, the TP includes the full $X guaranteed payment as income on the chef’s K-1. Here, the membership agreement demonstrates the chef only shares in profits not losses. So, the TP only allocates the guaranteed expense to those partners responsible for making up losses (the capital partners) as noted in Treasury Regulation Section 707-1(c) Example 3. The chef gets no allocation for the guaranteed expense as he/she does not participate in losses.If we change the situation slightly, we may change the tax results. If the membership agreement says the chef shares in losses, we then allocate a portion of the guaranteed expense back to the chef following the above treasury regulation.As a final note, a TP return requires knowledge of primary tax law if the TP desires filing a completed an accurate partnership tax return.I have completed the above tax analysis based on primary partnership tax law. If the situation changes in any manner, the tax outcome may change considerably. www.rst.tax
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People also ask single member llc operating agreement template pdf
What is the purpose of an operating agreement for an LLC?An LLC Operating Agreement is a legal document that outlines the ownership and member duties of your Limited Liability Company. This agreement allows you to set out the financial and working relations among business owners ("members") and between members and managers.
Does an LLC require an operating agreement?Most states don't require LLCs to have an Operating Agreement, but check with your secretary of state to see what the rules are. Regardless, even if you're the sole member of your LLC or your state doesn't require an Operating Agreement, it's beneficial to have one in place for several reasons.
Do all LLC have an operating agreement?An LLC Operating Agreement is the document wherein a Limited Liability Company memorializes its rules and structure. ... That said, many states do not require LLCs to create Operating Agreements. In fact, most do not.
What if an LLC has no operating agreement?Many if not most small business limited liability companies with two or more members do not have an operating agreement. An operating agreement is the document for an LLC that provides for rules and provisions regarding the management of the LLC and the members' rights vis a vis the other members and the LLC.
Does NJ require operating agreement for LLC?New Jersey does not require an operating agreement in order to form an LLC, but executing one is highly advisable. ... The operating agreement does not need to be filed with the state.