First time filing as an LLC

Forum|Forum|5 years ago
April 30, 2021
3 replies
37 views

This is the first time filing as an LLC and want to make sure I'm doing it right.

What "schedule" do I use for my LLC - previously we did the Schedule C.

How do I record my "Draw" on my personal income?

Thanks in advance.

TurboTax Home & Biz Windows

Best answer by rjs

If it's a single-member LLC it is disregarded for federal income tax purposes. It's called a "disregarded entity." That means that, as far as your tax return is concerned, the LLC doesn't exist. You file exactly the same way that you did when you were a sole proprietor and didn't have an LLC. You still report your business income and expenses on Schedule C. You do not report your "draw" because the LLC's income is your personal income, just like it was when you didn't have an LLC.

But who are the "we" that you mentioned? If you have a multi-member LLC it's a whole different story, unless you and your spouse are the only members and you live in a community property state. If you have a multi-member LLC, post back with more details and I or someone else will tell you what you have to do.

rjs

Answer

Level 15

If it's a single-member LLC it is disregarded for federal income tax purposes. It's called a "disregarded entity." That means that, as far as your tax return is concerned, the LLC doesn't exist. You file exactly the same way that you did when you were a sole proprietor and didn't have an LLC. You still report your business income and expenses on Schedule C. You do not report your "draw" because the LLC's income is your personal income, just like it was when you didn't have an LLC.

But who are the "we" that you mentioned? If you have a multi-member LLC it's a whole different story, unless you and your spouse are the only members and you live in a community property state. If you have a multi-member LLC, post back with more details and I or someone else will tell you what you have to do.

D

db_brewerAuthor

Level 2

Thank you, @rjs.

The "we" is considered a single entity - my wife is the Sole Owner and I am the "manager" of the account.

Based on that, I believe your guidance provided answers my questions.

Thank you!

ColeenD3

Level 15

By manager of the account, do you mean employee? You must either be an employee or contractor. If you just take a draw, , the LLC will need to issue you a 1099-NEC at the end of the year.