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LLC CPA discusses Taxation Options | Wilmington NC

llc cpa wilmington nc

Gary Bode, CPA: what taxation option is best for your LLC? For a free initial phone consult, please call 399-2705.

LLCs are a legal business entity in NC, but the IRS doesn’t have a special LLC tax return. So tax preparation depends on how the LLC chooses to be taxed during the LLC setup process. LLCs can decide be taxed as a:

  • Partnership and file IRS Form 1065 / NC D403 if there are two or more Members.
  • S Corporation and file IRS Form 1120-S / NC CD401S.
  • C Corporation and file IRS 1120 / NC CD405.
  • Single Member LLC and file Schedule C as part of IRS Form 1040 / NC D400.

Tax implications of this initial LLC decision warrant proactive consultation with your LLC CPA. The LLC CPA should be intimately familiar with more than just small business tax preparation. Each of the above IRS tax forms has inherent and unique tax positioning strategies. The goals of the LLC have to be factored in as well. Partnerships offer greater flexibility in equity transactions. If going public is a possibility, a C Corporation may be best. An LLC with only a single Member may be better off functioning as an S Corporation than a Sole Proprietorship (Schedule C).

Tax Planning and Positioning

Tax planning strategies change as underlying IRS regulations change. For example, in C Corporations, expected changes for 2013, from the current 15% maximum tax on dividends, to the shareholder’s personal tax rates, could mean 2012 is the year to take dividends. The AET is also expected to rise. So, if the C Corporation’s E&P and cash flow support it, 2012 dividends make sense. In 2013, LLC Members could be paying $246 more tax on each $1000 of dividends!

“LLC CPAs look at least two years into the future for tax positioning.”
– Gary Bode, LLC CPA and tax accountant

So, good LLC tax preparation involves more than just being facile with IRS tax Form 1065, 1120, 1120S or 1040’s Schedule C. The associated NC Form D403, CD405, CD401S and D400 also have issues when they depart from the federal tax forms. And LLCs are more often required to perform tax preparation for multiple States, sometimes making the federal taxation issues seem easy by comparisons!

If you need an initial free phone consult with an LLC CPA, call us at (910) 399-2705.

LLC CPAs generally perform a 4th Quarter tax extrapolation. This narrows the range of expected tax liability and affords an opportunity to examine any accounting or bookkeeping issues that cropped up during the year. It sometimes affords an opportunity for 4th Quarter positioning as well; it is perfectly legal to proactively structure a business such that it pays the least amount of taxes. So a proactive attitude in your LLC CPA or tax accountant really matters – accurate LLC tax return preparation should only be the baseline of service.

While we are a Wilmington NC CPA and tax preparation firm, we have long distance and international clients. Our virtual office streamlines the entire tax and consultation processes. If you like our ability, attitude and customer service, we may be able to offer you services even though you may not be physically in the greater Wilmington NC area. Through phone calls, E Mail, scanning, web portals and Skype, we find client proximity is less of an issue. So if you’re unhappy with your local CPA firm, or just need superb tax preparation, please call us.

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