A group of friends and I established a LLC in Colorado at the end of last year, that we intend to "use" this year. We are getting into the Real Estate investing business and were getting everything set up before we start. My question is simple. Since we didn't do any buying or selling, and as such, didn't make any money as a company, do we have to file taxes on anything?
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May 7th, 2008 at 1:37 am
A multi-member LLC is treated as a Partnership at the Federal level. You must file a Form 1065 Partnership tax return every year that the partnership is in existence. If you're on a calendar year, that was due on March 15th by the way so you're late. There is an $85 penalty per month per general partner for late filing, so get moving on it to avoid additional penalties!
At the state level, LLCs are usually treated as corporations with all of the corporate filing requirements including tax returns and often other reports as well. Many states also impose minimum franchise fees on corps regardless of profit or loss or even total lack of any business activity.
I'd suggest that you consult with a local expert on small business tax issues, a CPA or EA, not a storefront tax prep mill. You've probably unnecessarily complicated your lives with the LLC but what's done is done now so you have to play by the rules.