Partnership

I own a small business, so I do know the benefits of having an LLC or any other type of legal entity.

We have an LLC for our current airplane partnership, and just had our taxes (K1) created. The cost for this was about $500, so one of the partners asked why we have it, and can we dissolve it just running on our agreement.

In a small three person partnership in an airplane that looks like it loses money every year have a benefit over a partnership with an agreement? In this case mostly just to avoid a $500 fee.

Every partnership I've been in was an LLC.

 

Doesn’t the LLC protect you from litigation when one of your partners has an incident?

 

Are LLCs required to file tax returns if there's no income?

 

We do file a loss every year. I do understand the legal aspects mentioned too.

 

Our club 182 is in an LLC. looking at the costs split 5 ways over the year, mx, insurance, hangar, annuals, ect. 500 bucks split 3 ways is chump change unless your flying paper airplanes.
keep the llc imo.

 

Keep the LLC

 

Leaving out the question whether you would need to file a K-1 anyway (it's based on being treated as a partnership, not because you are an LLC), since you say you know the benefits and the cost of being an LLC, and

seems to me you have everything you need to make your own cost/benefit analysis. Nothing requires co-owners to be anything but co-owners. You don't have to have a legal structure at all if you don't want one.

 

If it’s just about the $500 then have one of the members learn how to do the taxes for the LLC. They should not be complicated for a simple LLC.

 

Risk management. You do annuals, inspections, etc. to prevent potential problems. Having taxes done professionally seems to fall in that category. If it was me, I would pay the part of the $500 to prevent any potential IRS problems. Not fair to your partner who would fire up TurboTax, make a mistake, and have all of that ire fall on him.

 

TurboTax for business. I used it for a small for profit LLC for about 10 years with zero issues from the IRS. You just need to remember the filing deadline is in March

 

The $500 in the scope of things isn't an issue except for the fact that after our annual, our yearly dues were depleted. Again, this isn't an issue because we realize the cost of flying our own airplane, but one partner said do we need the LLC, or just use our agreement. This year our K1 shows a big loss because we did some avionics upgrades. The liability issue is a big one, so there is at least that as a benefit to having the LLC.