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Subject Author Date
llc first time tax questions chavez 02-15-2008
Posted by chavez on February 15, 2008, 4:21 pm
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 I'm looking for some tax assistance. I started a single member llc
last august. I elected to file as an S corp (form 2553) at the advice
of a cpa. I chose Dec 31 to be the end of my tax year.

I initially transfered 500.00 dollars from my personal to my business
account for initial operating expenses. I have not made any money and
so far only have had expenses. (cell phone, web page, etc).

I am under the assumptions being a single member llc all profits /
losses transfer over to my personal return. What forms do I need to
file and how do I handle the initial 500.00 ( I spent about half in
2007)? I expect to have to invest more of my personal money into the
business in 2008.

I normally itemize on 1040A fro my Federal return.

What do I need to do for the State of Michigan where I formed the llc
as far as my business goes?

Any advice is appreciated.

Jeff

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Posted by removeps-groups@yahoo.com on February 15, 2008, 6:52 pm
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 On Feb 15, 1:21 pm, cha...@ameritech.net wrote:

> I am under the assumptions being a single member llc all profits /
> losses transfer over to my personal return.  What forms do I need to
> file and how do I handle the initial 500.00  ( I spent about half in
> 2007)?   I expect to have to invest more of my personal money into the
> business in 2008.

You should probably contact a tax preparer or CPA to help you out.
Also, there may be additional state laws in Micigan (for example in
California you have to pay at least $800 in taxes after the first
year, even S corporations pay a 1.5% tax on profits before passing the
income to the shareholders).

But to summarize, you will need to fill out Schedule C or C-EZ. Since
you made no money, you don't have to worry about Schedule SE (self-
employment tax). but you don't get to deduct health insurance either.

Regarding all deductions. The personal use is not deductible. If you
bought a computer and use it 40% for business, only 40% of it is
deductible (and over a period of 5 years). So the question is how is
your cell phone used.

> I normally itemize on 1040A fro my Federal return.

It's irrelevant as losses go on Schedule C, not A. BTW, your setence
says "itemize on 1040A" which is not correct as 1040A is another form
similar to 1040 and 1040EZ.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Ira Smilovitz on February 15, 2008, 11:59 pm
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> On Feb 15, 1:21 pm, cha...@ameritech.net wrote:
>
>> I am under the assumptions being a single member llc all profits /
>> losses transfer over to my personal return. What forms do I need to
>> file and how do I handle the initial 500.00 ( I spent about half in
>> 2007)? I expect to have to invest more of my personal money into the
>> business in 2008.
>
> You should probably contact a tax preparer or CPA to help you out.
> Also, there may be additional state laws in Micigan (for example in
> California you have to pay at least $800 in taxes after the first
> year, even S corporations pay a 1.5% tax on profits before passing the
> income to the shareholders).
>
> But to summarize, you will need to fill out Schedule C or C-EZ. Since
> you made no money, you don't have to worry about Schedule SE (self-
> employment tax). but you don't get to deduct health insurance either.
>
> Regarding all deductions. The personal use is not deductible. If you
> bought a computer and use it 40% for business, only 40% of it is
> deductible (and over a period of 5 years). So the question is how is
> your cell phone used.
>
>> I normally itemize on 1040A fro my Federal return.
>
> It's irrelevant as losses go on Schedule C, not A. BTW, your setence
> says "itemize on 1040A" which is not correct as 1040A is another form
> similar to 1040 and 1040EZ.

Nothing from an S-Corp goes to Schedule C. But first he will have to file an
1120-S federal return to generate the K-1 which will document the various
items transferred to the 1040 and where they go. No more 1040A filing
either, it's the full 1040 from now on.

Ira Smilovitz

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by taxxcpa on February 21, 2008, 10:28 am
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chavez@ameritech.net wrote:
> I'm looking for some tax assistance. I started a single member llc
> last august. I elected to file as an S corp (form 2553) at the advice
> of a cpa. I chose Dec 31 to be the end of my tax year.
>
> I initially transfered 500.00 dollars from my personal to my business
> account for initial operating expenses. I have not made any money and
> so far only have had expenses. (cell phone, web page, etc).
>
> I am under the assumptions being a single member llc all profits /
> losses transfer over to my personal return. What forms do I need to
> file and how do I handle the initial 500.00 ( I spent about half in
> 2007)? I expect to have to invest more of my personal money into the
> business in 2008.
>
> I normally itemize on 1040A fro my Federal return.
>
> What do I need to do for the State of Michigan where I formed the llc
> as far as my business goes?
>
> Any advice is appreciated.
>
> Jeff
You will need to File Form 1120S to report the corporate loss and
prepare a K-1 Form to yourself as 100% owner. Then you will need to
report it on page 2 of Schedule E, Form 1040.

You will probably need to get a CPA to prepare these forms. Since you
are obviously unaware of the need to prepare these forms, it would take
a considerable amount of time for you to attempt to do it yourself, and
you could easily do it incorrectly. You probably should have waited to
form the LLC and the form 2553 until the business began to have income.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Katie on February 21, 2008, 3:47 pm
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On Feb 15, 1:21 pm, cha...@ameritech.net wrote:
> I'm looking for some tax assistance.  I started a single member llc
> last august.  I elected to file as an S corp (form 2553) at the advice
> of a cpa.  I chose Dec 31 to be the end of my tax year.
>
> I initially transfered 500.00 dollars from my personal to my business
> account for initial operating expenses. I have not made any money and
> so far only have had expenses. (cell phone, web page, etc).
>
> I am under the assumptions being a single member llc all profits /
> losses transfer over to my personal return.  What forms do I need to
> file and how do I handle the initial 500.00  ( I spent about half in
> 2007)?   I expect to have to invest more of my personal money into the
> business in 2008.
>
> I normally itemize on 1040A fro my Federal return.
>
> What do I need to do for the State of Michigan where I formed the llc
> as far as my business goes?
>
> Any advice is appreciated.
>


S corporations are subject to the Michigan Single Business Tax (an
addition-method value-added tax) at the entity level for 2007, and
will be subject to the new Michigan Business Tax (a gross receipts
tax) for 2008. In addition, the flowthrough income from an S
corporation is taxable on a resident stockholder's individual Michigan
income tax return.

You definitely need professional help to deal with this. S
corporations in general are not a do-it-yourself project, and Michigan
is especially complicated because of the repeal of the SBT and the
substitution of the new Business Tax. Get thee to a pro, ASAP.

Katie in San Diego

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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