Discussion:LLC return filed using 1120S...no way, right?
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Revision as of 18:59, 19 April 2006 Sfrey006 (Talk | contribs) (This is a one ow) Next diff → |
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| {{ForumReplyPost|UserID=JR1|Date=19 April 2006|Text=But he has elected by filing the 1120S. He's no longer disregarded. Sfrey, call meant, it's an easy call. He's an S. If you feel it necessary to file the 8832, then do it, but I'll lay odds that IRS considers him an S now. No way, Gmike, do you want to even try to undo this. You're going to unfile payroll filings? And unfile the W2? And revoke, with penalties, the 401k? I think that would be disastrous and takes months if not years to straighten out. He's an S. Get over it. Could be worse..he could be a C! Or have real estate in the corp.!}} | {{ForumReplyPost|UserID=JR1|Date=19 April 2006|Text=But he has elected by filing the 1120S. He's no longer disregarded. Sfrey, call meant, it's an easy call. He's an S. If you feel it necessary to file the 8832, then do it, but I'll lay odds that IRS considers him an S now. No way, Gmike, do you want to even try to undo this. You're going to unfile payroll filings? And unfile the W2? And revoke, with penalties, the 401k? I think that would be disastrous and takes months if not years to straighten out. He's an S. Get over it. Could be worse..he could be a C! Or have real estate in the corp.!}} | ||
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| + | {{ForumReplyPost|UserID=Sfrey006|Date=19 April 2006|Text=This is a one owner business. I believe he should have never filed the taxes as an S-Corp. But..the CPA did. | ||
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| + | Can I "elect" to have the one-owner llc STOP being taxed as an S-Corp (even after this one was filed) and file him next year as an LLC?}} | ||
Revision as of 18:59, 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. | |
| 19 April 2006 | |
| Technically, that form 8832, but I'll lay big odds that that's one IRS doesn't care about, and will accept the first filing as an election. Others will ring in on their thoughts. I've never used the check the box deal, so I understand it, but never had to live there. In your case, you've got a bigger mess on your hands if you want to try going back and saying that he wasn't an S. PR tax returns have been filed, the 401k has been funded, etc. That's an easy, leave it alone, call... | |
| 19 April 2006 | |
| Hi,
Not to be a master of the obvious, but a sole proprietorship, without electing otherwise, is considered 'disregarded as a separate entity'. Which means, as you may know, that the company is truly a 'pass-through entity', and not regarded as a tax-paying 'individual'. Such as partnerships, to some extent, and as a sole proprietorships. To make this short, please let me know if this is a 'one' owner business, or something else.
Mike | |
| 19 April 2006 | |
| But he has elected by filing the 1120S. He's no longer disregarded. Sfrey, call meant, it's an easy call. He's an S. If you feel it necessary to file the 8832, then do it, but I'll lay odds that IRS considers him an S now. No way, Gmike, do you want to even try to undo this. You're going to unfile payroll filings? And unfile the W2? And revoke, with penalties, the 401k? I think that would be disastrous and takes months if not years to straighten out. He's an S. Get over it. Could be worse..he could be a C! Or have real estate in the corp.! | |
| 19 April 2006 | |
| This is a one owner business. I believe he should have never filed the taxes as an S-Corp. But..the CPA did.
Can I "elect" to have the one-owner llc STOP being taxed as an S-Corp (even after this one was filed) and file him next year as an LLC? | |
