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I have a question on personal/business income tax

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mattwfu99

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Looking for a little bit of advice on taxes.

In 2013, I set up an LLC to do some freelance work after I left my job. The billings were nothing exceptional, but I do have some money in that account, and it was set up with its own federal tax ID, etc.

My question is should I "pay" myself the earnings (minus any business expenses I can come up with), and count that as personal income, or just pay corporate taxes on the billings minus expenses from the LLC? And what level of income do I need for an LLC to have to pay taxes?

Also, am I still going to be able to do this in Turbo Tax, or am I going to need to hire someone to do my taxes this year?

Thanks in advance for any knowledgeable advice as well as for wise-ass comments.
 
Depending on who set it up, even though it has its own Tax ID, single-member LLCs are by default taxed as pass-through entites, so you have to show the income on your personal return, whether you take out the money or not. Whoever set it up could have elected out of the pass through and classified it as an S-Corp, in which case you need to file an 1120S, but you would probably remember that having been done.

If it is pass-through, I think one of the Turbo Tax programs will let you do that.
 
2&2 Slider To Leyritz said:
Depending on who set it up, even though it has its own Tax ID, single-member LLCs are by default taxed as pass-through entites, so you have to show the income on your personal return, whether you take out the money or not. Whoever set it up could have elected out of the pass through and classified it as an S-Corp, in which case you need to file an 1120S, but you would probably remember that having been done.

If it is pass-through, I think one of the Turbo Tax programs will let you do that.
Click to expand...

Yup. I'm pretty sure the small business version of Turbo Tax will handle a LLC taxed as a S-Corp as well.
 
Yeah though for that you need 2 different turbo taxes, the one for the 1120S for the S-corp, and then the personal version for your personal return that picks up the K-1. I think it is Small Business and then Deluxe.
 
Any reason why he can't just file on Schedule C and avoid fooling with 1120S/K-1?
 
2&2 Slider To Leyritz said:
Yeah though for that you need 2 different turbo taxes, the one for the 1120S for the S-corp, and then the personal version for your personal return that picks up the K-1. I think it is Small Business and then Deluxe.
Click to expand...

It may be. I've been working for the man for a few years now and shutdown my LLC.
 
2&2 Slider To Leyritz said:
Depending on who set it up, even though it has its own Tax ID, single-member LLCs are by default taxed as pass-through entites, so you have to show the income on your personal return, whether you take out the money or not. Whoever set it up could have elected out of the pass through and classified it as an S-Corp, in which case you need to file an 1120S, but you would probably remember that having been done.

If it is pass-through, I think one of the Turbo Tax programs will let you do that.
Click to expand...

Perfect. It was definitely just set up as a single member LLC, so this is the info I needed. Appreciate all the responses!
 
mattwfu99 said:
Perfect. It was definitely just set up as a single member LLC, so this is the info I needed. Appreciate all the responses!
Click to expand...

Single member LLCs can still make the S-election. Look for your form SS-4 that you would have originally signed to obtain the Tax ID, and if it has "Disregarded Entity" written in the classification section, then you are probably good. Just be sure you don't see a Form 2553, which is the S-election form itself.
 
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