chris comish’s income. with “members” for tax...

Future LLC Prospectus

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Background

The City of Shamballa* Social Network at www.cityofshamballa.net is a growing social

network targeting the New Age and Reiki/energy healing communities. Currently, Chris Comish,

the founder of the City of Shamballa Social Network, runs the network under sole proprietor

status. Income from the network and his book revenue are combined under sole proprietor

income. In the future, all income generated through the website is planned to be re-organized

under a LLC (Limited Liability Company), while the book revenue will continue to remain

100% Chris Comish’s income. The following prospectus is a business plan for the Multi-

Member LLC which will elect to be taxed as a partnership and “partners” are interchangeable

with “members” for tax purposes. This document is a draft and may change once the articles of

formation and operating agreement are officially established. This document assumes a Virginia

based LLC but the tax documents and process may change if the LLC is formed in a different

state (depends on the residence of Chris Comish).

Current Balance Sheet

Current Annual Income generated by the Network is as follows:

Current Annual Expenses of the Network are as follows:

Sales

Member Paid Access

Member Donations

Services

Trademark Licensing

Advertising Revenue

Website Directory Listings

Expenses

Hosting

Domains

Advertising

Trademark Attorney Fees

Charitable Donations


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The LLC will be seeking Members

The LLC formation offers a return on investment for LLC Members. Both current members of

the website and outside members can invest into the LLC. LLC Membership is open to both US

Citizens/Resident Aliens and Non-US/Non-Resident Foreign Citizens. LLC Members can be

Active Members (working for the LLC) or Passive Members. Active Members receive monthly

payments in addition to quarterly distributions. All LLC members receive quarterly distributions

of profit (% of profit is based on each members capital contributions).

LLC Operation

Chris Comish, will continue to operate the Network and thus will have the highest membership

stake in the LLC. The LLC will be Manager managed. Chris Comish will be the Member

Manager. He will remain the principal party for the LLC and manage the operations. In case a

company wishes to buy out Chris Comish, they must buy out all members in the LLC including

Chris Comish to become new managers. Additionally the LLC exists as long as there is a

member to replace Chris Comish. The second highest stakeholder in the LLC has first rights if

Chris Comish leaves the LLC (death or personal reason) and then the order of precedent will

follow based on the size of the stakes.

The LLC will have articles of formation and an operating agreement in the future. The LLC will

have its own business bank account. Chris Comish, the LLC manager, will receive guaranteed

payments out of the income of the LLC (treated as LLC business expense) before member

distributions are paid. His guaranteed payment will come only out of the profit of the LLC. The

payments will be set and defined- initially 60% of monthly profit until other active members

share in the duties of the LLC.

Once the LLC is established, active LLC members will be established and will take on

“employee” functions. Active members will not be “employees” but will receive monthly

guaranteed payments in which they pay their own estimated taxes on (30% upfront quarterly to

IRS and/or state, then get reimbursed if necessary following tax year). Chris Comish’s

guaranteed payment will then adjust from 60% profit to pay the LLC Active Members out of the

60% profit.

The LLC Manager Chris Comish can adjust the Articles of Formation and Operating Agreement

without Member input (this includes submitting tax returns on LLC’s behalf and members’

behalf only in the LLC state (with notification to member by sending to member)) to continue

the success of the LLC UNLESS the adjustments are regarding the member capital contributions.

Member capital contribution adjustments (i.e. pay in/pay out process and buyout procedures)

require majority vote to change the Operating Agreement. The Member base of the LLC will be

capped at 20 initially. Once more members become active members and the current active


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member’s duties transferred to more members, the number can increase. The Member base is

20% active and 80% passive initially. Example if 10 active members share the duties, then the

total member base can grow to 50 (40 passive members). Each member added increases the

equity of the LLC.

Member Categories

There are three types of Member categories. US Citizen, US Resident Alien, and Non-Resident

Alien (Foreign member living outside US).

Active Members (4 initially)

Active members receive monthly guaranteed payments plus quarterly distributions. Guaranteed

payments are paid monthly via PayPal unless the Active Member elects for EFT payment (US

citizen or resident alien members only).

The following is a planning table for the Active Members and their job descriptions (this is a

table if Active Members are established; if no other members are active Chris Comish’s payment

will be 60% of profit):

Chris Comish: Full-time. LLC manager, business management, finances-

distributions/guaranteed payments to members, capital contributions and member applications

tracking, taxes, licenses, attorneys, contracts, paid access. 20% of profit as guaranteed payment

monthly paid at beginning of following month. Highest stake in LLC.

Member A: Part-time. Book editing and Book publishing. Epub sales and publisher tracking.

Member must have active accounts at Lulu.com, Amazon Kindle Development Platform, Google

books & e-books, and the Scribd Store. (Must be US member (Citizen or Resident Alien) due to

tax laws). 20% of profit as guaranteed payment monthly paid at beginning of following month.

Second Highest Stake in LLC.

Member B: Part-time. Website lead administration, member of the month updates, approving

new members, suspending spam members. Member B is also the marketing member. Member B

also regularly updates City of Shamballa Facebook page and Facebook group and continues to

publicize City of Shamballa/Invites new members. Manages Website Directory listings and

Advertising Sales. Creates and manages Email Newsletter via Mail Chimp program. Manages

City of Shamballa contact email address. (Can be Foreign/Non-Resident Alien member). 15% of

profit as guaranteed payment monthly paid at beginning of following month. Non-Resident

Alien/Foreign members will need to submit form W8-BEN and certify their taxation status so

they can be relieved of 35% taxation on guaranteed payments and distributions. Third highest

stake in LLC.

Member C: Part-time. Merchandise retail via Amazon Seller Central, CafePress & Zazzle.

Manages retail account and notifies Chris Comish if inventory needs to be resupplied. Sends


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inventory to retailers as necessary. Creates products at retail sites. (Must be US member (Citizen

or Resident Alien) due to tax laws). 5% of profit as guaranteed payment monthly paid at

beginning of following month. 4th highest stake in LLC.

Non-active Members (16 initially)

All other Members of the LLC will be “investors” in the LLC. This entitles Members to

quarterly distributions (sharing of the LLC profit) based upon their membership share. Each

member (US Citizen/Resident or Foreign/Non-Resident will receive a Schedule K-1 tax return

by March 1st which documents the Member’s Capital and Distributions) for the filing of their

own tax returns.

Foreign (Non-Resident) members will have 35% of their distribution withheld by the LLC in

taxes for remittance to the IRS. There are no 1042-S filings for LLC member (partnership)

distributions. Those forms are only for the share of individual royalties (see City of Shamballa

website http://www.cityofshamballa.net/page/sell). Foreign (Non-Resident) members may be

able to claim relief of 35% tax by filing form 8804-C with the LLC when they apply for

membership. Foreign/Non-Resident members file form 1040-NR or 1040-NR-EZ form by April

15th with the IRS if they wish to receive any tax refunds from the IRS.

The LLC will withhold taxes from foreign members (Non-Resident) before sending the member

a distribution. US (Citizen or Resident) LLC members will pay 30% (self employment tax +

social security/Medicare/federal/state tax on their own after receiving the distributions, the LLC

will not remit tax for US members. US (Citizen or Resident) Members will pay quarterly

estimated taxes on their income to ensure they pay the IRS).

New Members

Prospective Members will receive a New Member Application for review before they invest in

the business. The requirements to become an LLC member are:

1. Submit an application- Name, Resident Address, Mailing Address, Nationality, US Citizen,

US Resident, or Foreign/Non-Resident. US members (Citizen or Resident) include your

distribution/capital withdrawal preference: EFT payment to your bank account or sent to your

PayPal account. U.S. Members (Citizen or Resident) provide form W9 to LLC for tax reporting.

Note to Non-Resident/Foreign Members: Foreign/Non-Resident members are paid only via

PayPal. Foreign members provide form W8-BEN and W8-ECI to LLC for tax reporting. Foreign

members also certify tax status (using form 8804-C) to provide to LLC to lower tax rates on

income. Foreign Members provide a W8ECI form for any distributions income not covered

under form W8BEN. Foreign members must have US TIN (file form W7) to get tax treaty

benefits. If no tax ID is filed, tax is 35% on all income for foreign members (withheld by LLC

http://www.cityofshamballa.net/page/sell


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before receiving a distribution or payment). Foreign members file 1040-NR or 1040-NR-EZ

form by April 15th to get refunds on tax witholdings.

All documents are emailed to Chris Comish (com5corp(at)yahoo.com)

2. Have a PayPal account Also each member provides a signed one year minimum agreement.

3. Contribute Capital. Capital is never taxed unless it is increased through stock gains, and then

the capital gains become income. Capital contributions are returned tax free if requested by

member upon withdrawal but gains through stock gains will be taxed first before return to

member. There is no minimum capital contribution and no timeline for contributions, members

contribute when they are able.

Member buyouts

Any Member can buy out other passive members of the LLC to receive higher stakes by

contributing more capital and also paying for the bought-out passive member’s contributions

(leads to more LLC equity). The buying out of active members requires adjustments to the

operating agreement and majority vote. Tracking of all members capital and buyouts will be

managed by Chris Comish.

Leaving the LLC

Members are required to be passive members or active members for one year. After that period

they can remain in the LLC and their stake will automatically increase (due to stock market

gains) or they can leave. If members leave they do not receive distributions any more, but they

do receive a return of the contributed capital plus capital gains on the sales of stock. Other

members can contribute capital to increase the LLC’s equity and their personal stakes at that

time.

Member Benefits

A membership share is based upon the Member’s capital contributions. $1 is equal to 1

Membership Share. No member may have a higher stake in the LLC than Chris Comish

regardless of their contributions- their capital contribution cap will be $1 less than Chris

Comish’s contributed capital. The Member that contributes the most capital will have the second

highest stake, unless one of the Active Members controlling the second highest stake declines the

buyout. Buyouts of active members require majority vote to confirm new member is capable of

controlling that stake in the business (i.e. if they choose to remain in the business they must

contribute their services or else completely buy the whole LLC (all of its income and debt and

become new management). Changes to the Operating Agreement (or if necessary Articles of

Formation) will be voted upon by the members by a quorum (Majority Vote). Votes will

typically be done via email after receiving the updated document. Members have limited liability

and their personal assets are protected against LLC debts.


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Capital Contributions Account (part of LLC checking account- accounted in Quickbooks)

The initial investment into Membership following receipt of application is an initial capital

contribution. Capital contributions are paid into the LLC‘s PayPal account. Capital contributions

are equity in the LLC and not to be used for expenses or guaranteed payments. Capital

contributions are the member’s stake in the LLC. Members can contribute more capital following

their initial investment at any time. Every capital contribution increases the member’s stake.

After the Member’s initial investment, there is no requirement to contribute more capital, but the

Member can if they wish. There are no minimum member contributions. If the LLC is in danger

of not retaining profit, a Member may loan their share of contributed capital to the LLC using a

promissory note until the LLC repays the Loan. In such a case, the LLC signs a promissory note,

a legally binding contract stipulating the terms of the loan agreement. It is not uncommon for a

provision within the promissory note to assign the lender an interest in the assets of the business

(usually the percentage of the member’s share that was loaned) should the LLC default, referred

to as a secured loan. During the Loan period the Member still retains their LLC member share

percentage.

The Capital contributions are accounted for as such:

50% is cash and goes into the LLC bank account (as security/hedge- accounted under capital

contributions) and the remaining 50% is invested (through the LLC’s brokerage account

managed by Fidelity or Scotttrade) into large cap and mega-cap stocks offering a return on

investment. The stock spread will not change unless a stock loses more than 20% of value, and

then another stock will be chosen to replace it. As the stocks increase in value so does the

member’s stake. The member’s stake is adjusted for stock gains on an annual basis. If a member

is a member for a long time, they are rewarded with increased stake due to the gains in the stock

market.

All capital contributions (including cash capital and stock gains capital contributions) are tracked

for each member by Chris Comish and stakes (member ownership %) adjusted annually.

Members must agree to a minimum of one year membership in the LLC. This will keep the

LLC’s equity base stable.

After the one year holding period, a member can decide to leave the LLC. Leaving the LLC

causes a shift in the equity of the LLC and is damaging to its asset base. But there may be

personal reasons why an LLC member can no longer be a member. An LLC member withdrawal

constitutes a complete capital contribution repayment. The returned cash capital contributions are

non-taxable as income, since they never were part of the LLC’s income statement and did not

gain.

LLC members also receive their gains in stock investments. Stock gains are taxable income; they

will show up on the Withdrawing Member’s Schedule K-1 which will eventually be reported on


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their 1040 Schedule C business income (foreign members will have taxes withheld before

payment and do not need to file unless they want to). All investment gains are based upon the

member’s stake in the LLC. For example if a member has a 10% stake, and then withdraws their

stake/membership, they are entitled to 10% of the LLC’s capital (whatever cash capital

contributions the member made) plus the gains of the sale of stock of their capital. Investment

gains, once the stocks are sold, and removed from the capital account (equity) into the

distributions account (profit). The distributions of the gains will only be to the withdrawing

member and the stocks sold will closely match the withdrawing member’s initial investment in

stock. Other members of the LLC do not have claims on the withdrawing member’s interest

because the withdrawing member only is eligible to withdraw their capital contributions- nothing

more.

Example: Member A contributes $500 in capital contributions. $250 goes into the LLC capital

bank account. $250 goes into the LLC Brokerage Account which is linked to the LLC capital

bank account. Member A has an 8% initial stake and a total of 10 stocks. After one year,

Member A withdraws their stake in membership. They receive $250 in cash and their

investments are now $400 which increased their stake to 10%. Member A receives $250 back

from the stock sale plus the investment gain in the sale of their share of stock. First the difference

in stock gain is accounted for as additional capital contributions (stock gains) made during the

year. Then, the capital equity account is deducted for those contributions and the gain in the sales

of stock is moved into the capital draw account account before paying Member A. The other

members do not receive any gain on the sale of stock in their account because the stock purchase

was originally made using the member’s capital contribution not made using the income of the

LLC.

The LLC’s capital accounts and distributions accounts are maintained using Quickbooks and are

not separate bank accounts. Although separate bank accounts may make accounting easier, a

large capital balance in the bank account allows the LLC to lower its business bank account

maintenance expenses and qualify for better business rates. The Capital contributions

account/equity has two sections. Capital contributions and capital draws. Capital draws are not

distributed to other members but only to the withdrawing member. The amount of the Capital

draw that is taxable is not the cash contributions made but the stock gains (listed as short term or

long term capital gain). The LLC does not withhold taxes on US members capital draws (stock);

the LLC is a pass through organization. The stock gains would be taxed at the rate the IRS

determines on the member’s income from the gains, but it is best for the member to pay 30%

estimated taxes on all gains and then get reimbursed when the member files their 1040 Schedule

C. Foreign members would receive all cash contributions back but for stock gains on investment

contributions, the LLC will withhold 35% of the stock gains for the member and remit the tax

withheld to the IRS, unless they filled out a valid 8804-C form.

Distributions Account (part of LLC checking account- accounted in Quickbooks)


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The LLC maintains a separate LLC Distributions account within Quickbooks to make accounting

easier. The distributions account is mostly used for purposes of the LLC including distributions

to LLC members. Payment of guaranteed payments (60% of income before distributions) to LLC

manager Chris Comish and/or other Active Members is a business expense but also comes out of

the account. All income into the LLC flows through the distributions account. All expenses of

the LLC come out of the distributions account prior to paying the LLC members distributions.

Dividends paid by the capital contribution stocks are also paid out annually through the

distributions account. Dividends are accountable for tax purposes annually; dividends are

identified by the LLC after receipt of its 1099-DIV form from the Brokerage and thus are paid

through distributions at the end of the fourth calendar year quarter (in January). Capital gains

received in the withdrawal of a member’s stake (sale of stock) are accounted in the distribution

account only after the member withdraws their stake and the gains are moved from the capital

equity/contributions account into distribution. While the member keeps their stake their stake

grows and the stocks are not sold. The same applies to interest reported on 1099-INT by the

LLC’s broker.

All members receive distributions (after expenses and guaranteed payments are paid) of the

LLC’s profit on a quarterly basis, within 30 days after the end of each quarter paid to the LLC

member via their PayPal account (or EFT if requested by US Member (Citizen or Resident)). All

distributions are subject to self-employment taxes for US members (Citizen or Resident) and are

listed on a Schedule K-1 for reporting on the member’s 1040 Schedule C form. It is

recommended each U.S. member (Citizen or Resident) pays estimated taxes via EFTPS on the

distributions when they are received. All distributions are accounted for at year end using a

schedule K-1 for the member’s 1040 tax return. Foreign/Non-Resident LLC members will have

US taxes withheld before distributions are made. 35% taxes are withheld by the LLC for any

foreign (non-US) member unless 8804-C adjusts the withholdings. Foreign/Non-Resident

Members file form 1040-NR or 1040-NR-EZ to claim refunds on tax withholdings.

LLC Members do not receive a Form 1099 or 1042-S for their distributions or guaranteed

payments. All payments are noted on the Schedule K1. 1099 and 1042-S are only for the

payment of royalties or other payments outside of LLC member status (example

publisher/customer who works with City of Shamballa to sell books through City of Shamballa

website).

Taxes

LLC receives forms W9 from US Citizen/Resident members and W8-BEN forms from

Foreign/Non-Resident Alien members. Form 8804 -C is provided by Foreign/Non-Resident

members to certify tax rate to relieve 35% tax on all distributions/payments.

Tax rates: Foreign/Non-Resident Alien members are taxed at 35% on all income if 8804-

C/W8BEN is not received. 35% ordinary income (includes guaranteed payments), 28% capital


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gains (short- for sales of stocks etc held less than one year), 25% ordinary dividends, 15%

qualified dividends/long term capital gains.

Non-Resident Aliens: City of Shamballa income is US source income because the LLC is a US

entity. Therefore US taxes apply to all earnings through this website regardless of its users'

locations. Foreign/Non-Resident Alien members will need to submit a W8BEN form to begin the

tax withholding rates adjustment process.

First, get an ITIN (see A-1) if you do not have one. If you have one already you can skip A-1.

Second, fill out the W-8BEN form (A-2) and email it to Chris Comish.

A-1. The W-8BEN form requires you to have an ITIN number even as a Non-Resident

Alien/Foreign Member (applies to all payees wishing to relieve 35% tax withholding by claiming

tax treaty status). The ITIN is a US taxpayer number for Non-US citizens. This number is

required for the tax form (for those wishing to claim tax relief). According to the end of the page

of The IRS Interim ITIN guidelines, you do not need to mail your original passport to the IRS to

get an ITIN to claim tax treaty benefits (you will still need to submit a notarized or certified copy

of your passport with the W7 form). To get an ITIN file a W7 (Request for ITIN) form with the

IRS. Follow the instructions for the W7 form. The mailing address for the W7 form is found in

the instructions. Check both boxes a and h. In the line next to box h write: "Exception 1(a)-

Partnership Income- claiming tax treaty benefits" then on the bottom write in your tax treaty

country and treaty article number. (This information is found in Publication 901, use official text

symbol TIAS# for treaty article number). You will need a supporting document from the LLC

(your withholding agent) (see exception 1(a) in the W7 instructions, and the LLC will provide

you a signed letter (withholding agent status) and a copy of the LLC agreement with your name

on it when you request it for the packet.) Carefully follow the instructions for the W7 form

writing N/A in all non-applicable boxes. The LLC can review your W-7 form before you submit

it if you email the draft copy to com5corp(at)yahoo.com. Once it is ready to go with all

supporting documents (certified/notarized passport copy with apostille (see instructions) + letter

from LLC) you mail it to the address in the instructions. Once you receive your ITIN number

from the IRS in approximately 2 months, you can email the W8-BEN form to the LLC. Your

distributions will continue to accrue and will be paid out once the W-8BEN form is received by

the LLC. Once you have an ITIN you don't need to get another one, you can use the same ITIN

to provide to other US entities, businesses or individuals.

A-2. Send a W-8BEN to com5corp(at)yahoo.com with subject line "W8BEN form LLC

member" This form will provide relief from US taxes if your country has a tax treaty with the

US. Don't worry about filling out item 9 on the W-8 form. Once you state your country on the

form, the LLC will know your tax rate by looking in the IRS publications.

B. If you decide not to submit a W-8 form then email Chris Comish at com5corp(at)yahoo.com

so you can begin receiving distributions at a rate of 35% taxation on your payments.

By March 1st you will receive a form K-1 from LLC (received via email or paper mail)

regardless of your earnings/tax withholdings. One copy of the form K-1 will be provided to the

IRS by the LLC for you. If your earnings were taxed for any reason (i.e. no tax treaty with US)


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your tax liability (under taxes paid) will be listed on the form. If there are no taxes on your

earnings, you will not have taxes withheld but you will still receive a form regardless. If taxes

were withheld, you can use this form to present to your country's tax authority as proof of US tax

paid for potential tax relief in your country. Non-Resident Aliens/Foreign Members file form

1040-NR or 1040-NR-EZ with attached Schedule K-1 form and 8805 form with the IRS before

April 15th to claim a refund on any tax witholdings. The Schedule K-1 will be provided also to

the IRS by the LLC along with the 8804/8805 forms.

LLC files an annual 1065 return. Provides Schedule K1 to all members to track monthly

guaranteed payments and quarterly distributions. Each US member (Citizen or Resident) pays

estimated taxes on all earnings and files form 1040 with attached Schedule K1 with the IRS.

Also files a 8804 form (including forms 8804-C and 8805) for foreign/Non-Resident Alien LLC

members, and provides a form 8805 with the Schedule K1 for each foreign/Non-Resident Alien

LLC member. Uses form 8813 to remit quarterly estimated tax payments to IRS for foreign

members’ withholdings for ECI income.

Other topics

The LLC does not offer healthcare benefits or retirement benefits, however each member may

wish to contribute some of the earnings to their own SEP IRA or otherwise to defer taxes. LLC

members are not employees. LLC Members are owners based on their stake and do receive

distributions of the LLC profit on a quarterly basis. LLC members who are active receive

guaranteed income which is subject to the LLC member paying their own taxes on the income

(federal, state, local). Active foreign LLC members will have tax withheld by the LLC before

they receive payments. LLC distributions fluctuate based upon profit of the business after

expenses, the payment of stock dividends during the year and if LLC members withdraw their

membership. LLC distributions also increase if new LLC members join which adds more stock

to the capital account and thus increases dividend payments.

Tax Questions

I am confused do I get a 1042-S or 1099-MISC for the LLC payments and distributions?

Foreign/Non-Resident Alien partners must provide ITIN to receive reduction in tax or tax on all

income will be withheld at foreign partner rate of 35%. Foreign/Non-Resident Alien partners do

not receive form 1042-S and partnership does not file form 1042 for partners (LLC members).

1042-S forms and 1099 forms are only provided to customers/publishers that receive income

outside of LLC membership.

What is gained in becoming an LLC member?

You have ownership stake in the Network. Personal liability is reduced. Quarterly distributions

of LLC profit give incentive to LLC members to get more City of Shamballa members and

spread the word! You basically receive income like an employee for participating in the business


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but you are not an employee and not regulated as one. Foreign members can participate in the

LLC and the US stock market via the LLC. There are lots of pluses!

Timeline

1. Chris Comish moves to a US state and files articles of LLC formation with state.

2. LLC gets EIN from the IRS. LLC Operating Agreement is established.

3. LLC (called partnership in Quickbooks) accounts for different accounts in Quickbooks...one

Capital/Equity and one Profit/Distribution using Quickbooks. One account is the capital account

(equity) and the other is the distributions account. LLC gets a Brokerage account after paying the

initial $500-$2,500 deposit of capital contributions. Brokerage account is linked to distributions

account.

4. LLC establishes a PayPal account and links distributions account to PayPal account. (If

member withdraws their capital then Capital account would send money to Distributions account

and then Distributions account to PayPal to pay withdrawing member). All Chris Comish

functions on website are transferred to appropriate LLC members. All PayPal buttons are in

LLC’s name and individual active member email addresses set up- 1 for service A, service B etc.

4. LLC solicits members and receives applications and initial capital contributions via PayPal

(capital contributions are withdrawn into distribution account and then sent from distributions

into capital account). Members wishing to contribute additional capital later: simply go to the

PayPal button on the LLC sign up page and contribute additional capital.

5. LLC members’ names, nationalities, resident status, PayPal email addresses, capital

contributions (initial) and additional contributions are all tracked by the LLC. Also each

member’s distributions and/or withdrawals are tracked by the LLC. Foreign/Non-Resident LLC

members have 35% taxes withheld from distributions. US (Citizen or Resident) LLC members

pay 30% taxes on their own through estimated taxes.

6. Trademark assignment of The City of Shamballa is transferred from Chris Comish to the LLC.

LLC files form 1099-MISC with IRS for payments to US publishers/vendors/attorneys etc and

form 1042/1042-S for payments to foreign publishers/vendors etc (in January). LLC State/Local

Sales and Use taxes are paid quarterly to LLC state on each payment received. The state taxes

are expenses on the Federal 1065 return. Federal withholding for Non-Resident members is paid

by LLC via EFTPS?: form 8813....estimated tax withholdings for customers issued 1042-S forms

are also paid via EFTPS, State withholding on income (Sales & Use) is paid by LLC via State

tax online system as quarterly estimated state tax payments (770ES or other form).

7. Feb 15 - March 1st of each year the LLC files its tax return form 1065 with the IRS. LLC

withholds state taxes from all LLC income (paid as expense) prior to all payments and files state

unified return/composite return (502/VK1 or other form) for non-resident partners with LLC.


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LLC members receive schedule K-1 (both US and state including copy of state form 502 or

otherwise) by March 1st of each year for filing with their tax return and a copy of non-resident

LLC partner state unified/composite return/K1 for all non-residents to use as a credit against

their state/country income taxes in their home state/country on the same income. LLC files

schedule K-1 with state of LLC tax withholding and files state partnership return and state

composite tax return. Files form 8804, 8804-C, and 8805 with IRS and pays estimated

withholdings (filing form 8813 each time) via checks using 8813 form. Form 1042/1042-S are

filed not for partners but for customers/publishers with royalties. Same goes with 1099-MISC for

US customers/publishers (royalties only). LLC Members (US Citizen or Resident Alien) file

form 1040 with Schedule K1 by April 15th. LLC Members (Foreign or Non-Resident Alien) file

form 1040-NR or 1040-NR-EZ with Schedule K1 and 8805/8804-C form by April 15th.

8. Operating Agreements and Articles of Formation are amended as needed via majority vote.

Amendments typically only have to do with how the capital contributions are managed. Most

amendments do not require majority vote and are managed by LLC manager Chris Comish.

9. Member Manager Chris Comish maintains current Member List and remits to the State as

required annually to keep the business license.

10. Members receive quarterly distributions 30 days after the end of each quarter. Distributions

are paid out of profit after expenses of LLC are paid (including guaranteed payments).

Distributions include dividends and interest from Brokerage account.

Business Income + Dividends + Capital Gains on sale of stock (withdrawing member) = LLC

income - guaranteed payments (60% of LLC profit adjustable based on operating agreement) to

Chris Comish and other active members = Quarterly distributions to all members of the LLC.

*The City of Shamballa is a service mark of The City of Shamballa Social Network. All

rights reserved.

chris comish’s income. with “members” for tax...

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