[NE] If I own an LLC with my children as minority members and reinvest all profits, do I still need to issue K-1 forms to them?

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I hear you! Regarding your question about the S Corporation, it can be a good choice for now, especially if you're looking to avoid double taxation and plan to reinvest all profits back into the business. (26 U.S.C. § 1361)

However, if you're aiming for non-profit status eventually, you'll need to meet specific criteria and possibly convert your structure. Converting your LLC to a non-profit or creating a separate entity both have their pros and cons. (NE Code § 21-2,133)

If you convert your LLC to a non-profit, it simplifies your structure by having one entity to manage. However, this process can be complex and requires meeting specific criteria to qualify as a non-profit, including restrictions on profit distribution. (26 U.S.C. § 501)

Creating a separate non-profit entity allows you to keep your current LLC for other business activities, which might offer more flexibility. This way, you can maintain the LLC for any for-profit activities and have the non-profit focus on the therapeutic services.

Consider what aligns best with your long-term goals and consult with a legal or financial advisor to ensure compliance with all regulations. Does this help clarify things a bit? Let me know if you have more questions or need further clarification!

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I am starting a LLC. I will be training horses for therapy.

Lexi, Chatbot

It's great to hear that you're starting an LLC for such a meaningful purpose! What state will your LLC be registered in?

Nebraska. My main question is I will be 60% shareholder and my kids are each 10%. I will be reinvesting all the money made or donated into the business for horses and feed and tack. Do I have to fill out the K-1 form and send it out to my kids?

Lexi, Chatbot

Have you already chosen a name for your LLC, and is it available for registration?

Yes. I have registered my business with the state of Nebraska. I am now doing my business articles of organization.

Legal Eagle

Hello, I'm an attorney who works in your area of law and I'll help you sort this out today. I've read what you shared, so let's go over what's happening and what your best next steps look like. Are you planning to file your LLC as a partnership for federal tax purposes, or have you made any elections regarding how the LLC will be taxed?

I planned on forming an S Corporation. I have 9 members, 4 of which only help make decisions. I want this business to go to my kids when I die, so they each have 10% ownership. I have filled out a form document you may be able to view. All the money will be reinvested in the business.

I plan on filing for a not-for-profit status also, but was told I needed to do the LLC first. Some time in the future it may have employees that get paid, but I will be the only one working now, and I will not be taking a wage.

Legal Eagle

It sounds like you have a thoughtful plan for your business. Could you clarify if you've already filed the necessary paperwork for the S Corporation election with the IRS? This will help in understanding your current status. Also, when you mention filing for non-profit status, are you planning to convert the LLC into a non-profit, or will it be a separate entity? This will help in guiding you on the right path.

I was in the process of getting the EIN, but have not completed it yet. I thought you could have an LLC not-for-profit. If not, then I guess I would probably make that a separate entity, and that would be for when I have professional therapists and clients coming to ride. I could continue the LLC as my part of the work behind the scenes. Does that make sense? I guess I could convert it also. Which would be best?

I will probably convert it. Feel free to read my e-form I have completed online. Let me know if it looks correct. I feel there will never be profit distribution. My goal is for it to be self-funded by donation, and only employees hired would ever make money. Does an S Corp sound correct for now?

Legal Eagle

Ok. I think that answers my questions.

Legal Eagle

For sure! Did I thoroughly address your question? If the answer is no, please let me know so I can help!

Legal Eagle

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