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Question about filing taxes for my business.

Old 12-10-2008, 03:08 PM
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Default Question about filing taxes for my business.

As most of you know I have started a small business building LED lights. I have this company set up as an LLC. I also have another small business that is set up as a DBA and I just file jointly with my wife and claim the income from the DBA business.

My question is this, when I do my taxes in 2009 how do I handle the LLC business?
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Old 12-10-2008, 03:24 PM
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Default Re: Question about filing taxes for my business.

Here is an article discussing this situation.

http://articles.latimes.com/2006/may...ess/fi-inbox31

and another

http://biztaxlaw.about.com/od/taxeso...lctaxation.htm
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Old 12-10-2008, 03:58 PM
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Default Re: Question about filing taxes for my business.

Hey Chris... why an LLC when you could have gone with an S corp????
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Old 12-10-2008, 04:09 PM
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Default Re: Question about filing taxes for my business.

emudryj - 12/10/2008 6:58 PM

Hey Chris... why an LLC when you could have gone with an S corp????
At the time it seemd like the best fit.
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Old 12-10-2008, 04:16 PM
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Default Re: Question about filing taxes for my business.

emudryj - 12/10/2008 6:58 PM

Hey Chris... why an LLC when you could have gone with an S corp????
Why not? SE taxes? Not saying you are wrong.

Single member LLC, file on Sch C. Got any assets? Probably worth your while to pay someone to do it. You'll likely save more money than it will cost you and less chance of oversights.

Still time for a new business vehicle this year...



You could do an S election in the future if you ever decide that would have some advantages.
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Old 12-10-2008, 05:08 PM
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Default Re: Question about filing taxes for my business.

A LLC can file form 2553 and elect to file as a S corp but you will need to do that before 3/15 of next year. If you do that you will then need to take a "reasonable salary".

As for the current year you will just file it on Sch C and pay SE taxes along with income tax on the profits
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Old 12-10-2008, 05:58 PM
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Default Re: Question about filing taxes for my business.

GWcpa - 12/10/2008 7:16 PM
emudryj - 12/10/2008 6:58 PM Hey Chris... why an LLC when you could have gone with an S corp????
Why not? SE taxes? Not saying you are wrong. Single member LLC, file on Sch C. Got any assets? Probably worth your while to pay someone to do it. You'll likely save more money than it will cost you and less chance of oversights. Still time for a new business vehicle this year... You could do an S election in the future if you ever decide that would have some advantages.
Why not??? I do not know...it was just a question... I'm totally uneducated on tax matters so I was just asking....

My wife and myself have a S corp, which at the same time is part of a LLC, I'm going to open another S corp by myself tomorrow, never thought on an LLC...to be sincere I do not understand the difference yet...

I was asking Chris why he choose to go that route to see if it wasviable for myself... not questioning his decision at all...
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Old 12-11-2008, 06:24 AM
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Default Re: Question about filing taxes for my business.

Chris - You received information above from 2 CPA's. I am also a CPA. You really should get some professional advice. My practice does not involve many small businesses, but I know there are several revenue rulings allowing a late S-Election. There are pro's & con's to LLC's and S-Corp's. My guess is there are more pro's to the S-Corp treatment in your situation. I don't have any LLC's that have elected to be treated as S-Corps so I can't really comment on tprice's suggestion above other than knowing it is an option.
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Old 12-11-2008, 07:25 AM
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Default Re: Question about filing taxes for my business.

Actually, the guidance is in the form of Rev. Procs, the latest being Rev. Proc. 2007-62. An LLC can file a Form 2553 by the due date of it's tax return, usually the March 15th following the end of the LLC's year and elect to be an S Corp. for all or part of the preceding year. This filing can be extended to September 15 if necessary. You should probably find a good CPA to assist you in these choices rather than trying to get really good, comprehensive on this web site. We can be pretty helpful, but it' almost impossible to ask all the questions that are necessary to get to the proper result.
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Old 12-11-2008, 08:14 AM
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Default Re: Question about filing taxes for my business.

One thing I have learned in an S Corp is to not leave any extra cash in those accounts at the end of the year. I'm not a CPA but I have found that its better tax wise to pay yourself the max and almost run the business at a negative. The reason is any money left in that S Corp will more than likley pass down as personal income.
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Old 12-11-2008, 08:41 AM
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Default Re: Question about filing taxes for my business.

It isn't the cash in an S corp, it is the profits that pass through. You can distribute all of the cash, but this will not change the taxable income.

Jal, I'm guessing Chris would not meet the requirements of section 4 of Rev. Proc. 2007-62 this year to qualify for a late election. I.e. I don't think it was his initial intention to file a 2553 nor has the entity acted as an S-corp during the current tax year. But I could be wrong and think you gave great advice.

Isn't this stuff fascinating?
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Old 12-11-2008, 11:06 AM
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Default Re: Question about filing taxes for my business.

GW, it really is exciting. When Congress changes the law 10 or more times during the year, it can even become somewhat confusing. I'm really glad that I have mostly retired from the day-to-day work and will just provide review services to my old Firm. As far as not meeting the requirements, based on the classes I have taken the last two years, the election on the Form 2553 is pretty much automatic, you just fill it out and attach to the filed 1120S and that's it.
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Old 12-11-2008, 11:17 AM
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GWcpa - 12/11/2008 11:41 AM

Isn't this stuff fascinating?
There's a reason I've transitioned my practice away from this stuff. No disrespect intended, rather the opposite. Most business owners have no idea the breadth of knowledge CPA's need.
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Old 12-11-2008, 12:03 PM
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Default RE: Question about filing taxes for my business.

I'm with Sprockets - Make an appointment to discuss your ENTIRE situation with a qualified tax professional. As for forming your business as a LLC or a Corporation, make an appointment to discuss the legal pros and cons of each for your situation AND the state you live and do business in.
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Old 12-11-2008, 12:08 PM
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Default Re: Question about filing taxes for my business.

Another vote for getting an accountant or other professional advice.
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Old 12-11-2008, 01:59 PM
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Default Re: Question about filing taxes for my business.

At least this first year, use a professional tax prep specialist. Then you won't have to stand in line to kick your own butt.

Good luck!
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Old 12-11-2008, 03:26 PM
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Default Re: Question about filing taxes for my business.

GWcpa - 12/11/2008 11:41 AM

Isn't this stuff fascinating?

OH YEA, I have spent today and will spend Friday in tax seminars, still I LOVE IT THOUGH
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Old 12-11-2008, 05:03 PM
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Kamper - 12/11/2008 3:59 PM Then you won't have to stand in line to kick your own butt.
Thanks Kamp, that made my night!
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Old 12-11-2008, 05:26 PM
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Default Re: Question about filing taxes for my business.

Accountants more than make up for what you pay them.
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Old 12-11-2008, 05:36 PM
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Default Re: Question about filing taxes for my business.

Funny part. My wife is a CPA, but her expertise is in corporate accounting. She does our taxes with Turbo Tax and it has always worked out great. She is just not sure what to do about the LLC. I guess we will have to pay and visit a pro.
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