FREQUENTLY ASKED LLC COMPLIANCE QUESTIONS
Welcome to Sabre's list of frequently asked LLC compliance questions (and their answers!). If you cannot find your question on this list, please feel free to email us.
Each FAQ on this page is linked to itself. If you want to link to a particular FAQ, such as the one explaining Texas Sandwiches, click on its title. In this case, your browser's address bar will display http://www.sabrecomplianceservices.com/ llc-compliance-faqs.php#texas-sandwich, which is the URL for that specific FAQ. You can copy and paste this URL into a document, or link to it from a webpage, and it will direct its user to the explanation of Texas Sandwiches on this page.
If you do not understand any of the corporate compliance terms on this page, please visit our LLC glossary for further information.
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Do LLC’s require separate federal tax returns? Do LLC’s require FEIN’s?
Do LLC’s require separate state tax returns?
Can Sabre help obtain EIN’s?
What exactly are Texas Sandwiches and what's the deal with them?
What happens when an SPE name is misspelled?
Does Delaware require me to file anything special if I change the Domestic jurisdiction of the LLC that owns my Delaware LLC?
Does the Foreign Secretary of State of my Delaware Domestic LLC require notification if I change the Domestic jurisdiction of the LLC that owns my Delaware Domestic LLC?
Do LLC owners have to handle unemployment taxes in states such as Texas?
Can Sabre help me set up bank accounts for investor LLC’s?
Why do you choose to ignore the widely accepted grammatical practice of pluralizing acronyms without apostrophes?
When was Sabre incorporated?
How many Sponsor clients does Sabre have?
How many entities does Sabre manage?
Does Sabre work with companies other than Sponsors?
Does Sabre ever give tax and/or legal advice?
Who is Sabre?
Do LLC’s require separate federal tax returns? Do LLC’s require FEIN’s?
No. As a “pass-through entity”, an LLC isn’t considered an entity of its own for federal tax purposes. The owner is taxed on LLC earnings via a schedule for their personal federal tax return; there is no separate LLC tax return. Therefore, the LLC is NOT required to get a Employer Identification Number (EIN) of its own for any federal purpose. Sabre can help you obtain an EIN however, if needed or desired for any reason.
Do LLC’s require separate state tax returns?
Certain states do require separate LLC tax returns. Sabre’s CPA is available to investors and their CPA’s for consultation regarding this procedure.
Can Sabre help obtain EIN’s?
Yes. Occasionally obtaining an EIN (or sometimes “Federal Employer Identification Number”) makes it easier to open up a separate LLC bank account. Sabre is more than willing to assist Sponsors or investors in obtaining EIN’s if needed or desired.
Once an EIN is obtained, a federal LLC tax return is still NOT required. In the event that a single purpose LLC owner receives a letter from the IRS requesting such a return, the owner may write back informing them that the LLC is only a single purpose pass-through entity.
What exactly are Texas Sandwiches and what's the deal with them?
A Texas sandwich is a General Partnership composed of a Limited Partnership and an LLC. For the LLC and the LP, the state of Texas requires a Franchise Tax from each, beginning 15 months after Qualification. If either entity earns less than $300,000 in a year, a “no tax due” form is filed.
In most TX Sandwiches, the LLC owns .1% of the entity, and the LP owns the other 99.9%. This was particularly useful prior to 2008, when LP's weren't required to file their own returns under this structure. As both entities are now required to file, the "Texas Sandwich" structure is losing its utility. As a note on this matter, Sabre recently encountered a situation in which one of our clients' LLC's did more than $300,000 worth of business within the fiscal year. However, when the amount owed was calculated, it was found to be less than $1000. Line 35 of form 05-163, the Texas Franchise Tax Report, instructs the taxpayer to not "include payment if [the total] amount [due] is less than $1,000," so the LLC was not required to pay anything afterall.
Sabre is pleased to offer Texas Sandwich Maintenance!
[NOTE: The Franchise Tax is being renamed to "Margin Tax."]
[Click here for more Franchise ("Margin") Tax information from the Texas Secratary of State.]
What happens when an SPE name is misspelled?
It has to be amended. If the SPE is “correctly” spelled on any subscription or other documents, it is technically referencing an SPE that does not exist until you amend the official SPE name.
Does Delaware require me to file anything special if I change the Domestic jurisdiction of the LLC that owns my Delaware LLC?
No, Delaware does not require any notification of the change.
Does the Foreign Secretary of State of my Delaware Domestic LLC require notification if I change the Domestic jurisdiction of the LLC that owns my Delaware Domestic LLC?
This change is typically communicated on the next Foreign Annual Report that your Delaware LLC files. As the filing of Annual Reports is included in Sabre’s complete, custom entity maintenance package, simply notify us of any changes you make and we will take care of the rest!
Do Single Purpose LLC owners have to handle unemployment taxes in states such as Texas?
No. TIC investors who own their passive investments via Single Member, Single Purpose LLC's, are not required to file unemployment taxes. While they indirectly “employ” workers in states such as Texas, they aren’t actually cutting checks. The direct employer that actually pays its employees, along with any contracted payroll company that actually processes the checks, have to worry about it.
Can Sabre help me set up bank accounts for investor LLC’s?
No. This is a service that Sabre will hopefully be offering in the near future. In the meantime, we are here to help answer your questions.
Why do you choose to ignore the widely accepted grammatical practice of pluralizing acronyms without apostrophes?
Sabre is like the New York Times that way - we choose to pluralize acronyms with apostrophes. The New York Times Manual of Style and Usage entry on the matter explains: Use apostrophes in the plurals of abbreviations and in plurals formed from letters and figures: M.D.’s; C.P.A.’s; TV’s; VCR’s; p’s and q’s; 747’s; size 7’s. (Many publications omit such apostrophes, but they are needed to make The Times’s all-cap headlines intelligible and are therefore used throughout the paper for consistency.)[1]
Sabre also uses all-caps in some of our titling that includes acronyms, and so this reasoning holds sway over our styling as well.
Another reason for the practice is that “LLCS”, “SPES”, and their variants and derivatives may easily be misunderstood to represent different terms than those we intend. For example, “LLCS”, could stand for “Laser Logic Computer Services”. We would hate for a sentence to be read “These Laser Logic Computer Services mitigate the risk of each investor’s entire asset base becoming susceptible to litigation.”.
Perhaps more likely, and more dangerously, “SPES” could easily be read as if it were in reference to the Roman Goddess of Hope, “Spes”, or even “Solar Proton Events”. We would regret one of our sentences being read “Sabre exists to serve TIC Sponsors by maintaining the compliance of their investors’ Solar Proton Events after close of escrow” (this has actually happened once before, and the calls we were forced to field from investors the month following publication were a nightmare).[2]
Adding apostrophes therefore clarifies the meanings of our pluralized acronyms, and until we have alternate solutions to the problems listed above, we have no intention of changing this practice.
Sabre is always grateful to receive grammatical corrections and criticisms. Please feel free to email us.
[1] Quoted in Whitney, Craig. "Talk to the Newsroom: Assistant Managing Editor Craig R. Whitney. " The New York Times. 2006. The New York Times. 15 Sept. 2008
<http://www.nytimes.com/2006/10/16/business/media/16asktheeditors.html?pagewanted=all>.
[2] This statement is made in jest and in no way implies the reailty of such a situation.
When was Sabre incorporated?
September 21, 2005.
How many Sponsor clients does Sabre have?
14 (Sponsors & Broker-Dealers) as of Spring 2008.
How many entities does Sabre manage?
2,416 entities in 43 states as of Spring 2008.
Does Sabre work with companies other than Sponsors?
Yes. We work with Broker-Dealers who recommend our service to their Sponsors, and we work with Attorney firms who refer Sponsors to us, or outsource their LLC maintenance to us in order to tidy up their own workload. We also currently work with select Registered Securities Representatives who pay for all of their clients’ entity maintenance as a service to them.
Does Sabre ever give tax and/or legal advice?
No. Nothing Sabre ever says or writes, whether implicitly, is to be construed as tax or legal advice.
Who is Sabre?
Sabre Compliance Services is an LLC specialist. We focus entirely on the compliance of Single Purpose Entities used in TIC offerings. We streamline all of the LLC Formation and maintenance processes such that a Sponsor company can painlessly integrate our services into its offering and receive a single invoice, and zero headaches.
Go to Sabre's home page and click on the button best representing your role in the TIC industry to learn more about how Sabre brings convenience, compliance, and efficiency to the TIC investing process.
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