Switched to LLC S-Corp mid year. How to file taxes

[UserTax]

I was operating business as a sole proprietorship since the beginning of the year, then in April/May established an LLC then mailed election form to IRS to be taxed as an S-Corp. I use PayPal for my business. it has my Social security number where I get the 1099k tax document the end of the year. My confusion is I added EIN to my PayPal account to start operating as a business in July and when I asked PayPal they said I would only get one 1099k with my EIN or social security number. I won't get 2 separate ones, one with social security and then the other one when I started operating as a business and added EIN.

I operated as sole proprietorship jan to June . then in July I added EIN to my PayPal and got on payroll and totally separating expenses business and personal. I established the LLC in April/May. When it comes to taxes do I need to separate the time that I was operating as a sole proprietorship(Jan to June) from the time I added EIN to my PayPal in July and started operating as business given the fact that PayPal gone give me one 1099k not 2. also how do I know if IRS accepted my Election form as its been over 4 months and haven't received any confirmation. Thx

[Mike9241]

what's important is the effective date of the S-Corp election. before that date you report Schedule C (regardless of sole proprietorship or single-member LLC) on and after that date on the S-corp. Who was the EIN issued to your LLC or you personally?

the S-Corp needs its own EIN you can not use the EIN f it was issued to you personally.  the Corp' EIN would appear on the IRS S-Corp approval letter  - CP261 Notice. without it you don't know if your s-corp status was approved or the effective date.

[Carl]

You will basically be filing a final SCH C with a closing date of at least one day before the S-Corp became active. Any and all assets, inventory and vehicles are removed from the SCH C business "for personal use". For the SCH C business to be closed, it must have no assets, no inventory, and no vehicle use - even if that vehicle use is less than 100% business use.

When starting the firsst 1120-S for the S-Corp, then opening date of the business will be the same exact date you opened the SCH C business. Doesn't matter if it was years ago either. Then add you assets with the same exact in-service date you used on the SCH C.

Now understand these dates, as they matter big time. You get them wrong, and darn near everything will be screwed up - especially depreciation on business assets.

Date the business opened - This is the date the business originally opened exactly as shown on the very first SCH C that you filed - even if it was years ago.

Date the business incorporated - At least one day after the SCH C business was closed and ceased to exist.

Be aware that as an S-Corp, you are required by law to take a minimum draw from the business every year. You are also required to make quarterly reports to the state the S-Corp is registered in. This state reporting has nothing to do with taxes.

Finally, the 1120-S corporate return is due by March 15 of every year. Late fees for filing the corporate return late are presently set at $205 per month, per owner. So while your personal 1040 return may have a filing deadline of Apr 15, the filing deadline for the corporate return is March 15.   Be aware of that, as filing late can and will get costly.

[tagteam]

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@Carl wrote:

Be aware that as an S-Corp, you are required by law to take a minimum draw from the business every year. You are also required to make quarterly reports to the state the S-Corp is registered in. 

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States typically require annual reports but quarterly reports (on Form 941) must be filed for those who pay salaries/wages and withhold Social Security and Medicare taxes and, of course, S corporations must pay their shareholders reasonable salaries for the services they perform for the corporation.