LLC background:
Single member LLC
Incorporated in Nevada
Does business in California
Has one(1) employee on payroll started June 2012
Tax Facts:
LLC incorporated in Nov 2011, paid the minimum $800 tax to California for
2011 taxes. How should I structure my LLC tax in the coming months as well as
next year? How about the payroll tax?
Thanks.
Your LLC, as a single member LLC operating an active trade or business, just
files its taxes as a sole proprietorship. Here are the IRS' instructions for
preparing and filing this form--and they're actually pretty good:
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
As you maybe hint at, your LLC as what the Treasury Regs label an "eligible
entity" also has the ability to make an election to be treated as a regular C
corporation (something you'd do by filing an 8832 form with IRS) or as a
Subchapter S corporation (something you'd do by filing a 2553 form).
Sometimes, small businesses save taxes and simplify by operating as a
corporation (either a C corporation or an S corporation)... but you need to
basically do "pro forma" tax returns as a sole proprietorship, as a C
corporation, and as an S corporation to *really* see the bottomline effect.
One other comment, for what it's worth: While the paperwork costs
(corporation tax returns, filing fees, etc) vary from location to location,
in my area, I think "buying a ticket" to the "corporation game" maybe costs
$1K to $2K a year... so you need to be sure you're getting benefits
commensurate with that ongoing cost. You don't for example, want to pay $2K
annually to save only $2K...
Stephen L. Nelson, CPA, Author QuickBooks for Dummies
kmurray | Community Moderator |
7/13/2012 - 8:43 am
Hi there,
It will be best to get in touch with a tax professional to get guidance on how to structure your LLC tax in the upcoming months-year. Check out the resources available from the Nevada Small Business Development Center: http://nsbdc.org/. These SBDCs are resources partners with SBA and should be able to give you guidance. Best of luck!
SeattleCPA | Window Shopper | 7/27/2012 - 9:23 am
files its taxes as a sole proprietorship. Here are the IRS' instructions for
preparing and filing this form--and they're actually pretty good:
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
As you maybe hint at, your LLC as what the Treasury Regs label an "eligible
entity" also has the ability to make an election to be treated as a regular C
corporation (something you'd do by filing an 8832 form with IRS) or as a
Subchapter S corporation (something you'd do by filing a 2553 form).
Sometimes, small businesses save taxes and simplify by operating as a
corporation (either a C corporation or an S corporation)... but you need to
basically do "pro forma" tax returns as a sole proprietorship, as a C
corporation, and as an S corporation to *really* see the bottomline effect.
One other comment, for what it's worth: While the paperwork costs
(corporation tax returns, filing fees, etc) vary from location to location,
in my area, I think "buying a ticket" to the "corporation game" maybe costs
$1K to $2K a year... so you need to be sure you're getting benefits
commensurate with that ongoing cost. You don't for example, want to pay $2K
annually to save only $2K...
kmurray | Community Moderator | 7/13/2012 - 8:43 am
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