Ok here's the deal. I've registered an LLC with the state and it has been approved.
I got to the IRS to register a FEIN and they indicated I would be clasified as a disregarded entity. I've performed more research and found that this is actually not a good thing in terms of liability and in the event that the LLC is held liable, the LLC can be taken over or control of by the creditor.
So based on what I"m reading I have two options (maybe more, not sure).
1. Give my child 2% of the business as a silent partner. (Not to thrilled about this because I don't know how my children will turn out LOL).
2. File form 8832/2553 to get the business re-classified as some sort of S-corp. Not quite sure about this, it seems this is saying that I'm going to somehow ask the IRS for permission to be treated as a corporation (taxation). I'm not too sure but It seems I have to do extra work in making sure my business entity is very documented and very separate if I pick option 2. So I have to keep meeting minutes and some other documentations (just me) regarding my business.
If someone can provide me some information about how this is done or how people (get around). Seems like the simple thing to do is put my daughter/son as a silent partner and make it member-managed? This seems like the lowest risk. The highest risk may be to try to convince the IRS this business needs to be classified as a corporation or like a S-Corp. Please indicate if my logic is correct?
Thanks
I got to the IRS to register a FEIN and they indicated I would be clasified as a disregarded entity. I've performed more research and found that this is actually not a good thing in terms of liability and in the event that the LLC is held liable, the LLC can be taken over or control of by the creditor.
So based on what I"m reading I have two options (maybe more, not sure).
1. Give my child 2% of the business as a silent partner. (Not to thrilled about this because I don't know how my children will turn out LOL).
2. File form 8832/2553 to get the business re-classified as some sort of S-corp. Not quite sure about this, it seems this is saying that I'm going to somehow ask the IRS for permission to be treated as a corporation (taxation). I'm not too sure but It seems I have to do extra work in making sure my business entity is very documented and very separate if I pick option 2. So I have to keep meeting minutes and some other documentations (just me) regarding my business.
If someone can provide me some information about how this is done or how people (get around). Seems like the simple thing to do is put my daughter/son as a silent partner and make it member-managed? This seems like the lowest risk. The highest risk may be to try to convince the IRS this business needs to be classified as a corporation or like a S-Corp. Please indicate if my logic is correct?
Thanks
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