LLC taxed as S Corp - Form 2553 or 8832 . . . or both?

Get an accountant or an EA or someone who knows what they are doing to do this for you.

 

This, and a real accountant not the Jackson Hewiit/ H and R Block clueless people.

 

Last year I walked into hr block with my 1099..they were shocked at first. Than said I would be owing 6,000+ without even running numbers. Than said they were not qualified enough to do a 1099.

 

Seriously????!!!!! These people mostly use software to do taxes. All they do is key in the numbers and ask questions that pop up on the screen. I know a fleet owner who owns 3 trucks and may still use them. I prefer having using people with more experience whom I know can answer tax questions specific to this industry. I did speak with one at a Walmart a few years ago. I was referred to a CPA that worked for the franchise. I wasn't impressed with the CPA to whom I was referred. If I were to go that route, I would just use one of the tax programs you can find online. I think you can do just as well and for a much lower cost.

 

Unless you're clearing somewhere in the neighborhood of $80,000 per year (after all expenses, and it will vary depending on your tax position) you're going to be paying more taxes as an S-corp than you would if you were filing schedule C as a sole proprietor...

 

Blair this will be long but I'll help you on this one. You are going to have your work cut out for you trying to do this yourself. Im assuming you already have your operating agreement completed if not there are some "canned" examples that you can copy. Form 2553 is your S-Corp election and has to be received by the IRS by March 15th. Also you will need to get an EIN number issued by the IRS. Word of caution you will need the EIN number with all banks in order to open up a checking account to pay bills. Now assuming the State of Missouri has approved your Articles of Incorporation you are in good shape. Another thing make sure you go on the "Cash" basis of accounting as opposed to the "Accrual" form. Make an appointment with a CPA on all of this information I'm giving you. Don't go cheap.

Here is where things get interesting with LLC's taxed as S-Corps for Wages. In a single member LLC you would normally pay yourself without taking out Federal, State, Local, Unemployment, and Social Security and file under Schedule C for your 1040. In a Multi-Member LLC you file under for 1065 with a K-1 which shows that value of gains/losses that are carried to the 1040. With an S-Corp (I'm assuming you want a W-2 at year end) you will have to make quarterly tax payment or semi annual tax payments to the IRS for the wages you pay yourself along with the state of missouri, file 1120-S show gains/losses on K-1, File W-2 with Social Security Adm. Do Not pay yourself something ridiculous like $150.00 a week unless thats all you can pay yourself at the beginning. Make sure your paying yourself a reasonable market value for your services.

To make things easier your local CPA usually has bookkeeping services available that includes all the payroll tax submissions I mentioned above. Use it its well worth it when your not having to enter invoices, record sales, track depreciation on book v tax basis. Let them do it.

Do not make the mistake of not submitting payroll deductions timely to IRS. Failure to do so triggers the Social Security Trust Fund Recovery Penalty and that is against you personally. No C-Corp, S-Corp, LLC can protect you from a breach of fiduciary duty to collect and file taxes. That penalty is double the amount originally owed times 30% interest assessed to you PERSONALLY (i.e. a Vail Piercing). Who said business isn't fun??

 

Please find a tax guy who knows trucking. Best money you will spend all year. It is as important as paying the insurance bill. Trust me....

 

B&G care to share your newly discovered information? Interested

in hearing the advice. From what I've heard you should just do

Sole Pro unless you have a net worth approaching 250k.

Beside the point if you have the S-corp, just curious what the

solution was for your OP?