An LLC Tax Managing Partner also referred to as, a "Manager" or an "Operating Member," is the individual responsible for making business decisions and managing the LLC.
The Operating Agreement of your LLC will define exactly what you can and cannot do within your own company. This article will be covering everything you need to know about an LLC Tax Managing Partner.
Managing Partner Definition
A Tax Managing Partner is the individual responsible for consolidating and filing the taxes on behalf of all members.
Typically, in Limited Liability Companies that are owned by multiple individuals (2+) one member assumes this responsibility.
This can be done in conjunction with another partnership position or it can be their sole function within your company. The job of a managing partner is to file the taxes of your LLC on a quarterly or yearly basis.
The Tax Managing Partner must be aware of the tax filing processes for your particular business entity.
There are many different kinds of businesses, and each will have its own specific requirements.
Manager VS Member-Managed LLC
The Tax Managing Partner is different depending on whether your LLC is Member-Managed or Manager-Managed.
If you are an LLC member of a multiple-owned LLC, then the individual who holds this position will be referred to as an "Operating Member."
Those who manage an LLC owned wholly by one person are called the "Managing Partners"
Either name can be used, and it doesn't matter which one your company chooses to adopt.
Another way to determine if you have a Manager or an Operating Member is by looking at what the Operating Agreement of your LLC states.
Generally speaking, a manager will have a little more flexibility when it comes to tax management.
Managing Partner Management Duties
The management duties of the Tax Managing Partner are to make sure that the taxes on your LLC are filed properly.
This can include quarterly or yearly estimated tax payments and if required, filing and paying your final taxes on time as well.
A managing partner can also be responsible for tracking and monitoring any assets of your company. If your company is responsible for a debt that LLC members are supposed to pay, but don't, then the IRS will hold you responsible for paying it.
This is also true if any necessary taxes on your LLC aren't paid and it is up to you as a member to make sure that they are taken care of.
The Tax Managing Partner is also responsible for making sure all necessary forms and documents are filed on time with the IRS and state tax agencies.
It is their job to communicate with your accountant or other financial professionals, pay them on time, and otherwise keep your business's day to day operations running smoothly.
Managing Partner Authority
A Tax Managing Partner has the authority to decide what taxes are filed and if any estimated tax payments are due.
The managing partner may also be authorized to act on behalf of the company for many different purposes, such as signing contracts, opening new bank accounts, etc.
In most cases, a manager or an operating member cannot send out legal documents to members unless all of the managers and managing members sign it.
This is because contracts must have signatures from both an individual and a representative on behalf of their company, which they can do if they are an individual operating member or the managing partner. This is meant to ensure that all managers and members can be held accountable.
A managing member will also have authority within your company if they are responsible for filing taxes on behalf of your Manager Managed LLC.
They should be well versed in tax application procedures for different kinds of companies, from sole proprietorships to corporations.
This is because a managing member must know how to monitor the financial activities of your company so that they can file appropriate tax documents.
For instance, if you have a limited liability company in place, then the managing partner should be well aware of what needs to be filed with the IRS and state agencies in order to maintain the company status.
If you are using an accountant or another financial expert, then your managing partner should know when and how to communicate with these people about the taxes on your LLC.
Managing Partner Liability
In some cases, managing members may find themselves liable for tax debts if they have been negligent about filing taxes.
If you are a managing partner or manager and make a mistake when filing a document with the IRS or state tax authority, then you could be held responsible for any consequences.
For instance, if your LLC accidentally omits a member's Social Security number on a tax document, then the member will likely be held responsible for any penalties or fines that result from this error.
If you work as a Tax Managing Partner for your LLC, then you have the responsibility of filing all necessary forms and dealing with all related parties regarding those forms.
You can be helped by an accountant or expert tax practitioner in order to complete this task, or you can do it on your own. However, you must be very careful when filling and making decisions about what forms need to be filed and when.
You can help streamline your company's corporate structure by filing necessary forms with state tax authorities in order to maintain limited liability status. Your expertise in this area will ensure that your business does not run into any problems regarding taxes or payments thereof.
Reasons to Choose Manager-Managed LLCs
The main reason one might choose to set up a manager-managed LLC is that the managers are responsible for all daily business operations.
This means that members don't need to deal with business matters on a day-to-day basis, allowing them more free time to focus on other parts of their personal lives.
Managers can also make decisions for the company, freeing more of the members' time to do other tasks.
Any of the managers can be designated as a Tax Managing Partner in order to help ensure that all taxes are filed on time, which is very important when maintaining your LLC's limited liability status.
There are some downsides to choosing manager-managed LLCs.
The tax filing and decision-making requirement can be a lot of work, especially if your company does not have any employees who can take on some of the duties.
Since managers handle all daily operations within manager-managed LLCs, members are free to focus on other parts of their life. They can leave tax filing responsibilities to managers or appoint one manager as the Tax Managing Partner to handle this task over others.
Who can be a Tax Managing Partner?
Tax Managing Partners can be one of the managers. If you do not have any managers, then you can either choose to appoint an outside person or select a member as your Tax Managing Partner.
Is the Managing Partner the Same as an Owner?
No. Managing partners are managers who handle and are actively involved in the day to day operations of the LLC, while owners are members of the company. Both however are subjected to self employment taxes.
To conclude, a Tax Managing Partner is one of your managing partners who has been tasked with filing necessary forms and dealing with necessary parties regarding those forms.
This person may be helped by an accountant or expert tax practitioner or can do it on his/her own if willing to take the time for research and figure out what needs to be done next.