If LLC Income Is Under $2k Do I Need To Pay Taxes On It?

We are a club, garden state ghost hunters LLC. We went LLC so as we can have small ghost tours to generate funds to help our club obtain equipment.

Neither the founders or members make any personal financial gain from these fund raisers.

But the GSGH LLC will get the profits after expenses which is usually only about 200 to 300 dollars, never exceeding over 2 K a year. We thought we should have an LLC so as we are legal to operate these fund raisers, but we have absolutely no idea how to file taxes and the like. Any and all help would be great.

Thank you.

– Robert, New Jersey

Answer

Assuming your LLC is taxed as a partnership, you would first file a Form 1065, partnership return.

This would report the total profit/loss for your LLC. However, the LLC does not, itself, pay these taxes.

Instead, the LLC then issues a K-1 (part of Form 1065) to each member of the LLC, showing their portion of the LLC’s profits. A copy of the K-1 is also sent to the IRS (similar to how a copy of your W-2 and 1099 are sent to the IRS).

Each member will then use the K-1 to report his percentage of the LLC’s profit on his own 1040 tax return.

Note: Be sure that you are running ALL your LLC ghost hunting expenses through the company. That means automobile mileage for driving to the tour areas, advertising, food during the tour, any recording equipment used, etc. etc.

You might find that at the end of the day you don’t have a profit, and might even show a small loss (which is deductible against your regular income).

For under $50 you can pickup an older version Quickbooks on Ebay, and track your LLC expenses to ensure that you’re not paying a penny more in taxes than you should.

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