Owning shares in another LLC, what is the simplest way to go tax-wise?

Let's say I already own a LLC (single-member, disregarded entity). Now, I just closed a new business and have a partner in the US, a new LLC will be formed, with two members - my partner and I.

I know that in this case, I'll be under IRS' radar because this would be a two member LLC. Would it be simpler to just add my current LLC to own shares in the new company?

Any suggestions appreciated!

Disclaimer: I don't have any issues with paying taxes. I'm just curious about the simplest way to go. Getting an ITIN is a lengthy process and I would rather avoid it as long as possible.

LLC Tax USA Shares

asked Aug 22 '13 at 02:19

Full Of Caffeine
3 points

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1 Answer

I'll be under IRS' radar because this would be a two member LLC.

What does this mean? Under what radar? How's amount of members relevant?

Would it be simpler to just add my current LLC to own shares in the
new company?

LLCs don't have shares, they have members. Tax-wise (US Federal) your SMLLC is a disregarded entity, so tax-wise there's no difference whether you're a member as an individual or SMLLC (US Federal). State tax laws may be different, and since you appear to be a foreigner - your own country's laws are important as well.

Getting an ITIN is a lengthy process and I would rather avoid it as
long as possible

But you said you already have a LLC in the US, so you should have gotten a tax id by now. Why would being a member of yet another LLC make any difference? The ITIN is for you, not for the LLC.

answered Aug 22 '13 at 03:49

Littleadv
5,090 points

Thank you for the answer! Yeah, I've got an EIN so far. Didn't need to get an ITIN yet though. No ECI. As for the "member-of-another-LLC" question, I was just wondering, since it would be a different business and how it would affect me. You mentioned on this post: http://www.brightjourney.com/q/owning-shares-another-llc-simplest-way-go-tax-wise, that for two-member LLCs the rules change, so I was a bit confused. As for the "share", I mean referring to the "distributive share" each member of an LLC has, the one that is defined in the Operating Agreement. – Full Of Caffeine 11 years ago
Sorry, I meant to link to this one instead -> http://www.brightjourney.com/q/tax-haven-delaware-single-member-llc-formed-non-resident-alien – Full Of Caffeine 11 years ago
@FullOfCaffeine domestic partnerships with foreign partners might have withholding requirements, and in any case MMLLC and SMLLC have different reporting obligations. I suggest you talk to a US-licensed EA or CPA. – Littleadv 11 years ago
Re the ITIN/EIN issue: if the income from the MMLLC is taxable to you - the fact that it is funnelled through the SMLLC doesn't matter. It will still be taxable to **you**, so you will still need ITIN. – Littleadv 11 years ago
Makes sense. Thank you! – Full Of Caffeine 11 years ago