Smarter Tax Planning for Business Partnerships with Unequal Ownership

Business partnerships can be incredibly rewarding — you get to build something great together. But when each partner has different personal tax situations, things can get tricky fast. For example, how can one partner hire their kids or deduct a vehicle when both partners share a single S-corporation, especially with unequal ownership? Reconciling those differences often turns into an accounting headache. A simple structural change can make all the difference. Here’s the approach we recommend: Set up the main operating business as an LLC Partnership. Each partner owns their share of that LLC through their own personal S-corporation. This setup keeps the shared business operations under one umbrella, while giving each partner full flexibility for their own tax planning. Keep in mind that state and local tax structures could negate some of the benefits of such a set-up so always have your tax accountant run the numbers. For instance, if the LLC earns $200,000 in profit, each partner’s S-corp would receive $100,000 (based on ownership). Inside their own S-corp, each partner can then manage things like hiring family members or deducting vehicle expenses—without affecting the other partner or complicating the shared books. It’s a clean, efficient way to keep your partnership strong and your tax planning personalized.

Smarter Tax Planning for Business Partnerships with Unequal Ownership

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