Discussion:LLC return filed using 1120S...no way, right?
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| Revision as of 18:24, 19 April 2006 JR1 (Talk | contribs) (Definitely no pa) ← Previous diff |
Revision as of 18:29, 19 April 2006 Sfrey006 (Talk | contribs) (Gmikeg..... Thi) Next diff → |
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| {{ForumReplyPost|UserID=JR1|Date=19 April 2006|Text=Definitely no payroll tax on the profits, so that is an error. Oh, my, and he assessed the full SS tax on the extra 41K? No wonder you doubt! That's wrong and goofy! Amend to retrieve that 6273 that was paid in error, and treat him like any other S with his 65k salary. }} | {{ForumReplyPost|UserID=JR1|Date=19 April 2006|Text=Definitely no payroll tax on the profits, so that is an error. Oh, my, and he assessed the full SS tax on the extra 41K? No wonder you doubt! That's wrong and goofy! Amend to retrieve that 6273 that was paid in error, and treat him like any other S with his 65k salary. }} | ||
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| + | {{ForumReplyPost|UserID=Sfrey006|Date=19 April 2006|Text=Gmikeg..... | ||
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| + | This guy filed his company as a single-owner LLC. Thus, he is taxed as a sole proprietor. ( Or so I thought). I received his tax returns and saw that the prior CPA filed his business return as an S-Corp (on 1120S). Apparently (per JR1) this is ok, as long as they "elect". What is needed to "elect" to file a registered LLC as an S-Corp.}} | ||
Revision as of 18:29, 19 April 2006
Discussion Forum Index --> Tax Questions --> LLC return filed using 1120S...no way, right?
| 19 April 2006 | |
| I have just picked up a small Llc as a client. The prior CPA filed the Llc return on the form 1120S. You can't do that right? By the prior CPA encouraging the client to file as-if they were an S-Corp would allow the company the "flexibility" of the Llc but, the Payroll Tax advantages of the S-Corp. Additionally, cost/charges would be un-necessarily incurred by
1) Prior CPA's charges for 940, 941, and UCT-6 (FL payroll tax) filing.............because, for an Llc they are not needed. 2) The client was told to pay the FL State payroll tax (which is he is exempt from because he is a single-owner LLC One other point.... the client has a solo 401(k). The prior CPA made the company profit sharing limited to 25% of wages....this would be true for an S-Corp but...........sincethe company is a single-owner LLC, wouldn't the company sharing portion be limited to 20% of net earnings to the owner? | |
| 19 April 2006 | |
| Should I amend the client's return? If I don't amend...am I allowed to file next year's business operations on Sch C (in standard single-owner Llc fashion)? | |
| 19 April 2006 | |
| Hang on. He did the check the box to tax that LLC as an S. You're an S now. Read some of the old threads on the topic. Like you, I don't care for this method of becoming an S, but he's an S. So think of him that way. It's ok. | |
| 19 April 2006 | |
| So...the prior CPA had the client pay payroll taxes on the wages ($65k) AND the net income of the company ($41k). This means that the client over paid payroll taxes by $6,273...right? (41,000 x 15.3% = 6,273) | |
| 19 April 2006 | |
| I understand that a C-Corp can elect to be an S-Corp but....are you sure an LLC can? | |
| 19 April 2006 | |
| There are a lot more questions to ask your client. Is this LLC an S-Corp, a partnership, or a sole proprietorship? Did they file the 8832 election? Was it a C-Corp to begin with? Did the C-Corp file a 2553 to elect to be treated as an S-Corp? | |
| 19 April 2006 | |
| Definitely no payroll tax on the profits, so that is an error. Oh, my, and he assessed the full SS tax on the extra 41K? No wonder you doubt! That's wrong and goofy! Amend to retrieve that 6273 that was paid in error, and treat him like any other S with his 65k salary. | |
| 19 April 2006 | |
| Gmikeg.....
This guy filed his company as a single-owner LLC. Thus, he is taxed as a sole proprietor. ( Or so I thought). I received his tax returns and saw that the prior CPA filed his business return as an S-Corp (on 1120S). Apparently (per JR1) this is ok, as long as they "elect". What is needed to "elect" to file a registered LLC as an S-Corp. | |
