Forums: Discussions for entrepreneurs and small business.

Hello,

I need to setup an LLC for a partnership where one member is in NC and another (myself) is in IL.

I am thinking to register the LLC in IL, because that is where I live.

If our LLC is registered in IL, will there be any tax implications for my partner in NC as it relates to IL taxes? Or, will he simply pass his share of business income to his personal tax return and file a schedule C as normal, meaning his state filing woudl only be with the state of NC and no IL state filing would be needed?

Any help would be greatly appreciated.

If you set up a partnershp, the partnership's income would be reported on a partnership tax return Form 1065.  Each partner would receive a schedule showing his proportionate share of income or loss from the partnership, called a Schedule K-1.  Each partner would report information from Schedule K-1 on his 1040 using Schedule E.

 

To answer your question, the partnership will need to file an IL partnership return and may be required to withhold taxes for the non-resident partner.  I would speak to your tax advisor as every situation is unique.  

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