2 member LLC

[Pacun]

Does this sound right to you based on the rules for your state?

A single LLC will pay $250 even if no income was earned. An LLC with two members file a partnership form with the state along with K1s and pay no taxes.

If that's the case, I should suggest to clients to make all LLCs with a 99% member and a 1% member and file state partnership form with K1s.

[Don in Upstate NY]

Not in NY. Both a single member LLC and an LLC taxed as a partnership have to file an IT-204-LL. Our minimum fee is only $25.00 however.

[based on a fast look at last year's form instructions. Feel free to correct me if I'm wrong.]

[jklcpa]

Are you asking about fees to keep an entity in good standing with a particular state, or are you asking about state income taxes? It seems like you are confusing the two.

Here in Delaware, the franchise tax fee for LLCs, LPs and genereral partnerships is $250 regardless of the number of members. Corps (both C and S) have 2 methods to determine their franchise tax. The minimum using the authorized shares method (for < 5,000 authorized shares) would pay a $50 filing fee and the minimum $75 franchise fee, so would pay a total of $125. These are fees/taxes paid to the Del Sec of State to keep the entity in good standing. Each business entity is also required to have a Delaware business license that is $75 per year in addition to whatever city licenses might be required. I've seen plenty of partnerships not ever bother to set up the franchise tax, and also plenty of Sch C businesses not have a state business license, and I've never seen the state go after these fees either.

Delaware piggybacks federal income tax laws and makes some modifications starting with federal income:

LPs, GPs, and LLCs that are taxed as partnerships: In general these entities do not pay state income tax and the income or loss is passed through to partners to be reported on their individual Delaware income tax returns.

S corps also pass-through income to its shareholders. S corps in general wouldn't pay income taxes if all shareholders are Delaware residents. For nonresident shareholders though, the S corp does pay state income tax at the highest Del rate on the nonresidents' proportional share of income. The tax paid is reported on the Delaware S corp Form A-1 (similar to fed K-1) as an estimated payment paid on behalf of the nonresident shareholder . The nonresident files a Delaware nonresident income tax return and reports the income and the estimated payment. If the nonresident's Del tax bracket is lower than the max, then the amount paid by the S corp on behalf of the nonresident would result in the nonresident receiving a refund from Delaware. This taxpayer would also request a credit for taxes paid to another when filing his or her resident state income tax return.

[Lion EA]

CT charges a business entity tax to SMLLCs, MMLLCs, partnerships, and S-corporations (all pass-through entities) of $250. A C-corporation would pay a minimum $250 income tax, so all businesses get hit the same. Then all businesses have annual report fees to the secretary of state ranging from $20 on up depending on the entity.

[Randall]

Ky has the same fee. The only difference is with MMLLC, you file Fed 1065 and Ky equivalent 765 and pay the $175 (same for S Corps, Ky form 720S, pay $175). For SMLLC, you run thru Fed Sch C with 1040, and it runs thru Ky personal 740, but in addition, file Ky SMLLC form 725 and pay the $175.