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| *Loan,banking and credit>>>business tax |
I have a question about small business taxes regarding profits? |
I have an LLC in California. If I pay taxes on the first years profit, and what's left of my profits rolls over to the next year do I have to pay taxes on them the next year also? Or is it just for the one year? To be more clear, do I keep paying taxes on the profits from the years before or is it just each years profits are calculated that one year and only taxed that one year? No. You roll what you made last year into Retained Earnings, and you can take distributions from that tax-free. But don't take out more than last year's earnings because that is now part of your basis and you will be taxed on what you took out IN EXCESS OF BASIS. Basically, don't take out more than what you earned last year. Essentially, you are taxed every year on income you made for each year. Source(s): LLC 1065, 565 and K-1 preparer. You are only taxed on the amount of profit you make each year. You figure that on Schedule C of the 1044 and it has nothing to do with profits you made in prior years. Keep in mind that I really don't like LLCs so I may be prejudice. First of all there are at least three ways that an LLC can file a tax return. Secondly if you are asking this level of question you really need to contact a tax professional. However since you asked you would only pay tax on the profit in the year that you earn it. It sounds like you elected to be taxed as a individual instead of a corporation, if so all your profits earned for each year will flow through and be added to your other income and you will be taxed as a individual. I never heard of roll over profits, are you talking about moneys earned and taxed that you have not spent. If so, no, but if you receive any interest income from earnings you saved the interest you earned will be included in your income and taxed. The LLC reports to you and the government only the net results of each year - this may include the profit (or loss) for the year as well as investment tax credits, etc. I would assume a professional prepares the returns for the LLC and can answer your questions beyond this, but each year's profits are calculated and only taxed that one year. |
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