llc first time tax questions

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

Reply to
chavez
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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.

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.

Reply to
removeps-groups

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

Reply to
Ira Smilovitz

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.

Reply to
taxxcpa

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

Reply to
Katie

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