1) Stay single member LLC, stop paying myself as an employee, start handling things as self-employed with flow-through to my personal tax filings. File to recover the employer payroll withholdings that I didn't need to make in 2021. If you remain a single member LLC it is against the law to issue yourself a W-2 and file payroll tax returns. This must be undone immediately this is not a choice UNLESS you choose to be taxed as an S-Corp which may not be possible for the 2021 tax year. SEEK LOCAL PROFESSIONAL assistance to make all these corrections.
2) Take on my wife as a second member for the LLC and then stop being a disregarded entity. Be a LLC/partnership. MD is not a community property state and I have zero concerns about loss of control or assets/share to her. That would allow me to be an LLC employee going forward. I'm not sure about looking back to fix 2021, or if I even want this -- is it advantageous? If you choose to be a multi member LLC being taxed as a partnership then you must first fix your current error and close the Sch C and then get a new EIN for the partnership and start that one fresh going forward. AND Partners are NEVER employees so again you do not file any payroll tax forms. Partners are issued a K-1 from the separate form 1065 for the partnership return.
What do you think? What is important that I have to do by year end? How can I find the right pro to steer me through this and the other things I'm screwing up. I'm in MD just outside NW DC.
RUN to a local tax pro to get educated on what you want to do and what is best for your situation. Seek an enrolled agent who handles business returns ...
https://www.irs.gov/tax-professionals/choosing-a-tax-professional
