First understand that when it comes to ***TAXES*** (AND ONLY TAXES) there is absolutely no difference between an S-Corp and an LLC that is "treated like an S-Corp". So when it comes to taxes (And I stress, *ONLY* taxes) you will have an S-Corp. Period.
I'm assuming the conversion will happen New Year's Eve. If so, that makes things rather simple.
Basically, you will close/disolve the sole proprietorship on Dec 31, 2019.
If your sole proprietorship has assets, then you will show all of those assets as "removed for personal use" on Dec 31, 2019.
If your sole proprietorship has inventory, then you will show all remaining inventory as "removed for personal use" on Dec 31, 2019.
If your sole proprietorship claims *ANY* vehicle use, then you must show that you "stopped using this vehicle in the business in 2019" with a last day of business use date of Dec 31, 2019.
This will basically dissolve the sole proprietorship on Dec 31, 2019.
You will not deal with the S-Corp taxes until you file your 2020 taxes in 2021. But it is imperative that upon completing your 2019 taxes showing the dessolution of the sole proprietorship, that you print *EVERYTHING*. Not just the "forms required for filing" or the "forms for your records". You need to print absolutely everything to include all calculation forms and worksheets. I guarantee you that if you don't, then it will not be possible to do your first IRS Form 1120-S Corporate tax return correctly.
For 2019, you do *NOT* need to purchase TurboTax Business (different from Home & Business) since your S-Corp will not exist until 2020.
Multi-member or single member is still being decided,
If both you and your spouse will be owners of the S-Corp, then there's nothing to decide. It will be a multi-member LLC.
Personally, I don't understand why you don't just create an S-Corp from the get-go and bypass all that LLC stuff. When you file the 2553 to treat your LLC "like an S-Corp", that is for *tax* *perposes* *only* and nothing else. So if your business is sued, that has nothing to do with taxes and the courts will not see your business as an S-Corp. They will see your business as a Multi-member LLC/Partnership where the owner(s) is/are personally liable. When one files the IRS Form 2553 to have their LLC "treated like an S-Corp" that takes on several connotations.
1) The S-Corp treatment is for "tax" "purposes" "only" and nothing else.
2) The business *MUST* follow all the laws, rules and regulations at both the federal and state level that apply to S-Corps.
3) One of those laws is that all owners of a S_Corp are required by law to take a required minimum distribution from the S-Corp every year, and you will pay tax on that distribution like it or not.
4) S-Corp tax returns are due March 15th each year. With an extension it is due Sept 15th. Late filing penalties are steep. It's $200 per owner for each and every month the return is late.
Now that's just the tip of the iceberg. So you may want to consult a professional in your state on this. There are other requirements of an S-Corp that can (and will) cost you dearly if not met or done incorrectly.
Overall, it would make more since to just close the sole proprietorship effecting Dec 31, 2019 and open an actual S-Corp on Jan 1, 2020.
