Single Member LLC Taxes

[hitman]

Hi all,

I just opened an LLC in WA, and am confused like many others, on the tax procedure.

For federal, I plan on just using forms 1040SE,C to file my taxes along with my income tax return for the money I make from my LLC and the money I make from my regular job.

I am confused about estimated tax payments. Do I need to file these quarterly as well, or is are the two forms mentioned above good enough to file by April 15th?

Thanks a lot for the guidance.

[sukie]

All profit and loss pass through to the members. A single member LLC as basically treated like a sole proprietorship. You should be fine with what you are doing. If the business grows to large profit volumes it may require estimated taxes in the future.

I own a copy of NOLO's LLC book It is very easy reading and great for reference. You can pick up one anywhere even online download.

[GuyBBY]

Hi HitMan,

Generally you will not need to do quarterly filings, but I have never done business in Washington before, so I would check.

The Secretary of State usually requires a yearly annual filing (basically to just confirm you are still up and running, who are the members, etc), and then some states have a minimum LLC tax fee that needs to be paid on the STATE forms. For example, in Vermont, I have to:

-File an Annual LLC Form by March 15. Non tax related, simply for records.
-A minimum fee of $250 is due as an LLC tax for Vermont (separate from federal) April 15
-Fill out the state forms for LLCs (check your sec of state website), and also fill out the federal forms. All of that ties back to individuals members claims on their income tax forms.

Here is a great book that you should keep on hand for any situation - taxes and more:

Amazon.com: Forming an LLC: In Any State (Book and CD-ROM) (Entrepreneur Magazine's Legal Guide) (9781599181059): Michael Spadaccini: Books

Good luck,

Guy

[hitman]

Seems like Nolo wants me to pay estimated taxes:

"Unlike a corporation, an LLC is not considered separate from its owners for tax purposes...Each LLC member must make quarterly estimated tax payments to the IRS."

1. Search google for "how llcs are taxed nolo"
2. Click on first link
3. Go to page 2

This is my first year of the business, just started in late July. I did have a fulltime job all of last year and have this year as well (would that make a difference?).

Thanks.

[GuyBBY]

HitMan,

If you notice on page two, you have now found yourself under a new heading, "Consider Electing Corporate Taxation", this is where the quarterly issue comes into play. I believe you should only be concerned with this right now, until you have more members:

Income Taxes

The IRS treats your LLC like a sole proprietorship or a partnership, depending on the number of members in your LLC.

Single-Owner LLCs

The IRS treats one-member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the IRS.

As the sole owner of your LLC, you must report all profits (or losses) of the LLC on Schedule C and submit it with your 1040 tax return. Even if you leave profits in the company's bank account at the end of the year -- for instance, to cover future expenses or expand the business -- you must pay income tax on that money.

I would highly recommend that you call your local SCORE office and schedule a time to sit with a counselor for free. These are usually retired executives that know what they are doing. This question, and many others, you could chat about and get it put to you in very understandable terms.

Also, I still recommend the book I referenced in my above post.

Guy