We have this Home-based partnership me and my husband and we both confused what type of business should we file to the IRS that will cover some exemptions. Is it Limited Liabibility Company or Limited Partnership? We are looking for some advice. Thanks guys

Fr_Chuck

Well it will be a LLC if you have had an attorney set up your business as a LLC and have filed it that way with your state.

It will be a limited partnership if you have a written limited partnership agreement.

excon

Hello Irene:

This decision should be based on a whole lot more information than we have. Therefore, I suggest that you hire a CPA and ask him. You should already have one on the payroll to do your books and taxes....

excon

irene_0ne

We just started our Business Partnership July 15,2007 so we are trying to get some issues about tax exemptions. Well anyways Thanks for the suggestion guys I really appreciate it.

excon

Hello again, irene:

Well, I'm not an accountant, but I can tell you that you get no more "exemptions" (and I think you mean deductions) no matter how you organize your business. If office supplies are a deductible expense, then they are and it doesn't matter if you're a partnership or a corporation.

The advantages of a corporation are limited liability. The downsides of a corporation are the reporting requirements.

There are other issues to be considered like estate planning issues and that's why you need your own personal CPA.

There are NO tax advantages to you between a partnership, sole proprietorship and a corporation.

excon

irene_0ne

I see thanks excon. I will talk to our CPA and inform about the Partnership we have. Thanks I appreaciate it.

ScottGem

As excon said, if you are looking to deduct business expenses against business income, then all you need is a valid business. You can do that as a sole proprietorship using your regular tax return and adding a Schedule C.

You have referred to this partnership as if its a legal entity. Did you sign some paper that created the partnership? If so, go to the attorney or CPA who drew up the paper to explain it.

But any expenses that you incur that are solely a cost of doing business is deductible. For example, if you buy a ream of paper you can deduct it as office supplies. However, if your kids use that paper to print out their homework, then you legally need to pro-rate it. If you use your personal car for making deliveries or visiting clients, you can deduct the mileage, but I would try claiming depreciation or insurance or maintenance unless the car is solely used for business purposes.

You seem to have a CPA, so your best bet is to keep a complete record of your expenses and let him sort them out.

HBF

Check with your accountant. My accountant told me that filing as a LLC will not save me tax wise, but it will protect your personal assetts should you get sued or file bankruptcy.