Multi-member llc vs Partnership

[Ryan S.]

I have already submitted the paperwork to the state to be an LLC now I am trying to create my EIN #. Should I just click continue and be a mult-member LLC? There will be 3 people in the company so im not sure what to do?

What is the benefits of a Multi-member or should I file a 2553 and be an S corp?

[Dave Toelkes]

With a three-member LLC, your options for federal income tax purposes are to (1) have the LLC treated as a partnership, or, (2) have the partnership treated as a corporation.

The LLC is still an LLC governed under state law, but for federal income tax purposes, you have to elect how you want your LLC to be taxed.

If your LLC will be engaged in an active income business, then the corporation election is usually preferred. If the LLC will be engaged in a passive income activity (such as a rental property activity), then the partnership election is probable the better choice.

If you leave the election blank, then you default to partnership.

[Paula R.]

I'm curious if you chose the partnership election and what forms the LLC had to send out last year for the 2014 tax year. My son (NV) and I (NM) want to buy a NM rental house and are trying to figure out the easiest way to hold title where he can take the depreciation and I can take the income, AND have the least amount of ongoing fees and paperwork. Any tips? Thanks!