Looking for tax filing advice in Houston!

7 Replies

Hello BP family! 

I have a question regarding getting my taxes filed for my LLC. My team just formed the LLC and opened a business account in the middle of December last year 2020. We have not had any cashflow or positive income since then or even before we started. I am reaching out to see if there is anyone in the Houston area that could give me a recommendation on where to file our taxes? Its pretty much a zero tax filling if not negative from expenses. Thank you all in advance!

An LLC doesn't file taxes. You do. At least that's how it's always been with me. The IRS doesn't care about your LLC. When your LLC makes $100, James Munoz makes $100. If your LLC made $0, then James made $0.

The "exception" to this is filing your "no tax due" franchise report with the Texas secretary of state.  Don't forget to do that or your LLC will becoming no longer "in good standing" 

Originally posted by @Cody L. :

An LLC doesn't file taxes. You do. At least that's how it's always been with me. The IRS doesn't care about your LLC. When your LLC makes $100, James Munoz makes $100. If your LLC made $0, then James made $0.

The "exception" to this is filing your "no tax due" franchise report with the Texas secretary of state.  Don't forget to do that or your LLC will becoming no longer "in good standing" 

Just like how Cody described, an LLC is typically taxed like a partnership, meaning the profits flow up to the partners (or members, in the case of an LLC) who are then taxed individually.

An LLC can also elect to be taxed as a corporation. This is very easy to do ("checking the box") and can be used to "block" the taxation from flowing up. I would talk to your CPA or tax lawyer about the most tax-efficient structure in your case.

Finally, as Cody correctly mentions, you'll want to make sure to have your Texas filings up to date as well. You won't want your LLC to no longer be "in good standing" as lenders will require that.

 

@James Munoz Hey just to add a little nuance here. If you are the ONLY member / owner of the LLC, the IRS calls it a disregarded tax entity, and, like @Cody L. says, all the income and expenses get reported onto your personal tax return.  If you have two or more member / owners, then the IRS treats it like a partnership and you file taxes on Form 1065. You would need to call the IRS to get a tax id number for the partnership. Income gets reported to each owner of the LLC on a form called a K-1. Since you opened a bank account already, it sounds like you have a single-member LLC because the bank would have asked you for the tax id number if it was a multi-member LLC, but it sounds like you may have opened the LLC under your own social. Hope that helps.

@James Munoz

If you are looking for a professional in Houston, I would reach out to @Michael Plaks . He has been practicing tax for over 20 years and he works exclusively with real estate investors.

You mentioned creating an LLC with a team - This does bring up some considerable tax implications.

You may be required to file a partnership return if your LLC has more than 1 member.
Texas does not have a personal income tax - However, they do have a franchise tax on LLC's.

@Michael Plaks can describe to you all the tax implications.

Thanks for the mention, @Basit Siddiqi .

@James Munoz - there is a good chance that you have not even started business in 2020 for the IRS purposes and do not need to file anything for the business in 2020. Expenses you had in 2020 are very likely "start-up expenses" to be deducted in 2021. But this is only a guess that needs to be confirmed.)

On the second reading, you mentioned a "team" which might require a partnership return. There's more that we need to know about your LLC, your partners (if they are actually partners) and your December activities.