Legal Question in Business Law in Georgia

Registered a business as an LLC in the state of Georgia with 8 members. We all like the benefit the LLC provides with keeping business and personal taxes separate. Went to get an EIN in the IRS website but got a message saying that due to the amount of people, the business will be taxed as a partnership. What is the benefit of that if we can't keep business and personal taxes separate. Plus 3 of our members are college students will a partnership affect their financial aid?

Asked on 6/10/20, 5:03 pm

1 Answer from Attorneys

Glenn M. Lyon, Esq. MacGREGOR LYON, LLC, Business Attorneys

The IRS message simply means that unless you elect to be taxed as a subchapter S corporation (i.e., an S-corp), by default you will be treated as a pass-through entity for tax purposes. And because there is more than one (1) member, that tax treatment would be a partnership.

However, the tax treatment has nothing to do with liability and accounting - the entity is still a separate, incorporated entity. It is merely a tax classification.

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Answered on 6/11/20, 10:03 am

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