Holding company LLC with subsidiary LLC

Forum|Forum|1 year ago
April 28, 2024
2 replies
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Holding company LLC is formed in WY (let's call LLC1) as a single member LLC (SMLLC) and disregarded entity. An operating LLC (let's call LLC2) is formed in Nevada as a SMLLC and disregarded entity, and is owned 100% by LLC1. LLC1 and LLC2 each have their own EINs.

LLC1 does not have its own bank account. All operations for LLC2 uses its own EIN and bank accounts under LLC2's name.

What forms do I fill out for taxes? Is it just a Schedule C for the holding company, LLC1, under LLC1's EIN? Or do I need to file a Schedule C under LLC2 as well? Can I combine all expenses and income in one Schedule C for both EINs and both LLCs?

When paying myself, should the draw be included in the accounting for LLC2 since that it where all operations is occurring? Both LLC1 and LLC2 will have separate books.

Thank you.

Best answer by Rick19744

Some comments:

Both LLC's are disregarded and the "end" owner is you.
For tax purposes, you only file one return (Schedule C) under LLC1. This is because LLC2 is disregarded.
Technically, neither LLC needs its own EIN unless you have employees, however, some banks require a separate EIN and some don't like to use their SS#.
There could be some separate state filings so check with your specific Secretary of State on this matter.
Since this will be filed on a Schedule C, you don't record any payroll to yourself. All income and deductions will be reported on the Schedule C and you will pay the applicable taxes on this net figure; regular tax and SE Tax.
As stated, it is a good idea to have separate books and records for each LLC.

Rick19744Answer

Employee

Some comments:

Both LLC's are disregarded and the "end" owner is you.
For tax purposes, you only file one return (Schedule C) under LLC1. This is because LLC2 is disregarded.
Technically, neither LLC needs its own EIN unless you have employees, however, some banks require a separate EIN and some don't like to use their SS#.
There could be some separate state filings so check with your specific Secretary of State on this matter.
Since this will be filed on a Schedule C, you don't record any payroll to yourself. All income and deductions will be reported on the Schedule C and you will pay the applicable taxes on this net figure; regular tax and SE Tax.
As stated, it is a good idea to have separate books and records for each LLC.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.