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gaspin
02-21-2014, 05:03 PM
This past year in March two friends and I created a new LLC and Iím curious how that will affect my, and their, personal taxes.

Details: We created our LLC in March 2013 running on the calendar year. I know this means we must file for our business by April 15th which Iím having trouble with, but thatís not the concern of this post. Instead, I would like to gain some insight into how we file our personal taxes.

One thing to note is we are not operational yet as the company is website based and weíre still in the development stage. Because of that, we only have expenses with no income generated.

I usually use Turbotax for my taxes as I donít need anything too complex
Ex. https://turbotax.intuit.com/personal-taxes/online/basic.jsp

However, I donít know if I, or they, can still use something like that now that we own a business. Instead, Iím thinking weíll need to use something a little more:
Ex. https://turbotax.intuit.com/personal-taxes/cd-download/home-and-business.jsp

I know the easy answer is to use a CPA for our business and personal taxes, streamlining them both together. However, for us younglings, a CPA is too expensive.

Questions:
1) Which version of Turbotax should we use to file for our personal taxes?
2) What are the specific nuances we should take into consideration when filing?
3) What potential pitfalls or mistakes could I make that will catch up with me (us) later on.
4) Any finer points youíd like to give me would be greatly appreciated! Iím in a little over my head!

CSomm
02-27-2014, 01:09 PM
A CPA is not more expensive than the type of Turbo Tax that you need, and will be much better and more thorough during the process. However, if you insist on doing it yourself with TurboTax, I'd get into the Home & Business package which starts at $75.
There are too many nuances to take into consideration when filing, although Turbo Tax often will suggest some ways to get through the process without losing your shirt---a CPA will be better able to sift through the details and make better choices, you will save money getting one in the long run.

Laz_Sz
04-12-2014, 02:59 PM
I’ve only used TurboTax in school, in personal tax class. So I can’t really comment on TurboTax, but I would suggest you to speak to a CPA, or accountant who does business taxes.
In case you are the single owner (member) of the LLC, than most likely you would report business income and expenses on form Sch-C, which is part of your personal tax return, BUT: you mentioned that you opened the LLC together with 2 friends. If there are more than one LLC members, than you will have to file a separate tax return for the business.
An LLC can be taxes multiple ways. This is why most entrepreneurs choose this business entity. An LLC with multiple owners can be taxed as a Partnership (Form 1065), as a Corporation (You have to elect to be taxes as a corporation – C Corp return Form 1120), or an S-Corporation (Again you have to file election forms for this – S-Corp return: Form 1120S)

More likely than not, you should have filed a Partnership return for the LLC (Form 1065), this form reports the business income and expenses. Partnerships do NOT pay income taxes, instead it splits the profit between the partners/LLC members, and the individual members pay taxes on their respective share of income. Each partner receives a form K-1 from the partnership, and this K-1 has to be included in your personal tax return.

You also mentioned that the business isn’t operational yet, and you only have expenses. In this case you might still have to file a tax return for the LLC, with zero amounts for both income and expenses. Expenses incurred before start of business could be categorized as “Start-up expenses”, and deducted later, once the business becomes operational (amortized over a set period of time).

Without knowing the details, I can only offer generic guidelines. Believe me it is in your best interest to talk to a CPA, who specializes in small businesses. It won’t cost you as much as potential IRS penalties for not filing, or filing the wrong forms.

taxcpa
10-10-2014, 01:29 PM
Multi owner LLC are taxed as a partnership by default but may be taxed as a corporation if the LLC files an election with the IRS. Depending on how your LLC is taxed it will impact your personal tax return in different ways. See:

http://www.newcompanyinfo.com/income-tax-and-self-employment-tax

Chris_Tax
10-10-2014, 02:03 PM
In California, you have to prepay an LLC tax of $800.00. If you got your LLC in 2014 the $800.00 tax is due immediately. Then in 2015 you owe another $800.00 by April 15th. This is due regardless of making a profit or not