Business Tax Services in Huntington Beach

Most business owners are self-employed.  The 2017 tax reform (TCJA) made this entity type more advantageous with the implementation of the Qualified Business Income Deduction while maintaining the ease of setting up.  Business activities are reported on individual tax returns (Schedule C).

SMLLC is formed with a single-member as a separate legal entity.  This can be an individual, a corporation, an LLC, or foreign entity.  Federally, an SMLLC is required to file as a disregarded entity (Schedule C for a sole proprietor) but in California must also file Form 568 – LLC Return of Income.

MMLLC operates as a pass-through entity with similar ownership abilities as an SMLLC. Federally, its default tax treatment is as a partnership (Form 1065). However, it can choose to be treated as a C or S corporation of tax purposes. Members are issued both a federal and state Schedule K-1.

General, Limited, and Professional partnerships all file as partnerships federally (Form 1065) but in California are required to file Form 565 – Partnership Return of Income. Partners are issued both a federal and state Schedule K-1 to report individually.

An ‘S-Corp’, or QSub in California, are corporations that elect to be treated as a pass-through entity. This status must be requested from the IRS and the entity is subject to strict requirements related to its shareholders, class of stock, and locale of incorporation. Federal (Form 1120S) and state (CA Form 100S) S corporation returns are required.

C-Corps can hold onto profits and are not required to operate as a pass-through entity. Profits are subject to tax at the corporate level and then again when dividends are paid to shareholders. The number and types of shareholders are all-encompassing. Federal (Form 1120) and state (CA Form 100) Corporation returns are required.