October 5th, 2009 . . . .
Categorized under: Quickbooks Advice

What Is The Benefit To Starting An Llc In Regards To Taxes?

I started an LLC at the end of last year. This year I have made close to $20K and am recording all financial transactions using QuickBooks so that I can prepare all my financials for year end. I dont know anything about filing taxes.
I have not been getting paid as my business is not yet turning profit.
Do I have to file personal and company? Do I file personal with company?
I really need some help!!

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Comments

  1. The main benefit to starting an LLC (from a tax standpoint, as this is the direction I believe your question was heading), is that you are only taxed at the individual level. An LLC is what is called a pass-through entity, that allows all business earnings to ‘pass-through’ to the members/partners/owners. This is similar to an S-Corp, but the ownership and protections vary slightly.
    As for tax return filing, it will depend on whether or not the LLC is a single member (if you are the only owner) or has multiple owners. If this is a single member LLC, you will only need to file a personal return, with the LLC’s information displayed on an attached schedule. If it is a multi-owner structure, you will need to file a Form 1065, from which each owner will get a K-1 that will contain the information that goes on your personal tax return.
    As you are not likely a tax professional, I highly recommend using the services of a professional to ensure that you are filing your taxes properly. You may say “I lost money, so why file?” Well, you can use these losses to offset earnings from another source, or your combined income if you happen to be married filing jointly.
    Kudos on using QuickBooks and tracking your financial data…this should keep your tax prep costs down, since your information is organized.
    Sorry for such a long answer, I hope it covered what you were looking for…or at least gives you some ideas of what to ask next!


    jdubbsgr
    October 5th, 2009

  2. If you do not have a partner, then you are sole properitor.
    You are self employed. You will report your income and expenses on schedule C or C-EZ (Form 1040). This income is subject to SE tax at 15.3%. Read about self employed (or independent contractor) tax filing and payment of estimated taxes: http://taxipay.blogspot.com/2008/04/tax-…


    Jss
    October 5th, 2009

  3. Sounds like you need a professional tax preparer. Your financial statement for the business will go on Schedule C, and the total profit or loss will be posted to page 1 of your 1040. You didn’t make $20k. you grossed $20K. You made zilch.


    Bibs
    October 5th, 2009

  4. No tax benefit.
    See an accountant. There are some options on how to file with an LLC, and a CPA can help you choose the best way.


    Judy
    October 6th, 2009

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