llc operating as sole proprietorship or partnership ???
I am thinking of weather operating my llc that I am about to form as owned by just me or include my wife as partner. Which one would be more rewarding for tax purposes.
What I know so far is if I am the only member I would file taxes for the llc under my name. And if it is in partnership then the llc has its own taxes. Does that differ if the two members are spouses (since my wife and I already do file taxes together)
Another question regarding the mortgages, how would sole proprietorship and partnership differ when it comes to applying for mortgage. (the llc is new so it doesn't have credit history or assets)
There is no difference in taxes when discussing a sole member LLC and a husband/wife LLC. 100% income will be reported on the joint tax return.
If it's a single member LLC (SMLLC), then all income activity will show up on either Sched. C (normal ordinary business) or Sched. E (rental real estate).
If it's a multi-member LLC (LLC), then the activity will be reported on the LLC's 1065 tax return (no taxes due by the LLC) and K-1s will be issued to the members who will then report that income on there own tax return.
A sole proprietorship is any activity that is under taken personally for a profit or business motive. It is in your name and you personally would be held responsible for any and all liabilities without limitation.
An LLC, whether single member or multi-member, provides a limit on the liability that a member is responsible for and removes extra liability from unforeseen incidents. Do not use or confuse sole proprietorship with SMLLC.
Sole proprietorship will have mortgages in your personal names and an LLC will have a mortgage in the LLC's name, but usually you will have to provide a personal guarantee to the mortgagor.
Joe