I am a sole proprietor of an LLC with an S-corp tax election. I am a contractor. As such, jobs (i.e. payment) are not regular at all and I did not issue myself regular wages, only paying off expenses as the money came in and that is all. I have just discovered that I should've issued myself a W-2 withholding Medicare and Social Security. We've obviously passed the deadline for W-2s. Since I only withdrew money to pay expenses and bills, can I legally go another route?
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At this point, you really need professional guidance. An LLC with an S corporation election is required to file a Form 1120-S and that form was due March 16th of this year for the 2019 calendar year (i.e., your S corporation return is late).
Further, you did not pay yourself a reasonable salary and that is generally required in the case of shareholders who are essentially employed by the corporation. In conjunction, quarterly tax reporting forms are required to be filed and they obviously were not.
You always have the option of revoking your S corporation election, but you should definitely consult with a tax and/or legal professional.
See https://www.irs.gov/forms-pubs/revoking-a-subchapter-s-election
At this point, you really need professional guidance. An LLC with an S corporation election is required to file a Form 1120-S and that form was due March 16th of this year for the 2019 calendar year (i.e., your S corporation return is late).
Further, you did not pay yourself a reasonable salary and that is generally required in the case of shareholders who are essentially employed by the corporation. In conjunction, quarterly tax reporting forms are required to be filed and they obviously were not.
You always have the option of revoking your S corporation election, but you should definitely consult with a tax and/or legal professional.
See https://www.irs.gov/forms-pubs/revoking-a-subchapter-s-election
realistically most of the time the IRS won't bother you if you don't take a salary the first year. the money you took out shoul d be treated as a distribution not SE income.
as you cn see S-Corps can be a pain. separate return, possibly state taxes on it's income
the real advantage of an s corp is that maybe you take a W-2 for less than the full profits and thus save on social security and medicare taxes.
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