http://www.incsmart.biz/What-is-a-US-LLC...
So im starting an LLC soon and was wondering how my profits are claimed and how the irs knows if i actually made any money.
Say i start a tutor business with me as the only tutor. I go to clients houses and they cut me a check under my LLC's name. I deposit the check into the LLCs bank account. Then at the end of the year i would claim profits right? So how does the irs know how much i was actually paid? Couldnt you just lie and say you only made $500 when you actually made $1000? There is no actual paperwork for the payments you received?
Another situation, say i start an LLC that is a staffing company. Companies hire me to find workers for events they put on, or to find servers for a private party...ect. So my company would find the workers and have them filed as a subcontractor to work the event. I have them fill out a w9 and then i fill out a 1099 misc to report their wages, correct? Now does the company that hired me to find the workers just cut me a check without any paperwork (tax forms) for me to fill out? Or Would i have to fill out a w9 for the company throwing the event and they also fill out a 1099 misc for me? Or do they just cut me a check and i deposit it into my company's bank account, then pay my subcontractors and again have no paperwork of reported earnings.
This gets confusing to me. I could explain further but i think i will leave it at that for now.