How do I file a partnership return (LLC)?

Question

My brother and I have an auto repair business. I know form 1065 is for partnership. Do I fill out this form first? What about K-1? Do I send out form 1065 and recive a k-1 from IRS or k-1 is generated by itself? I know I should have a professional do this, but at this point I can't afford it.
Thank you.

Answer 1

The 1065 and K-1 work together in that the 1065 tells the IRS as a whole what the partnership or LLC did over the year and the K-1 is what the partner uses to report his/her share on their personal tax return.



You will need to first fill out the 1065 and submit that to the IRS. Then you will have to fill out a K-1 for yourself and your brother.



If you are using tax software, it should generate a K-1 for all the partners.



Good luck.

Answer 2

Jesse's answer is correct. You will generate both the 1065 for the partnership and K-1's for each you and your brother. You will mail the 1065 and the K-1's to the IRS. And, don't forget your state tax return requirements.

Answer 3

An LLC is a "disregarded entity" for Federal tax purposes. In the case of a multi-member LLC you file a Form 1065 Partnership return. This is an informational return only, no tax is paid with it. As part of the Partnership return you generate Schedules K-1 yourself, one for each partner, and give them to the partners. The partners use these to prepare their individual Form 1040 tax returns, though they do not attach copies to their returns.



For state tax purposes you'll have to contact your state tax authorities. Many states treat LLCs as corporations and require a state corporate tax return, and possibly other filings. Those returns also often require the payment of minimum excise taxes regardless of the profit or loss turned by the business. Even states without an income tax sometimes levy franchise fees on LLCs. TX is an example of one such state.



If this is all unfamiliar territory to you, and it certainly sounds like it is, then you really DO need to consult with a local tax professional. Preferably a CPA or EA who specializes in small business taxes, not a storefront tax prep mill. You really can't afford NOT to.