Started an LLC last year in Sept, still employed at my corporate job and have a W2, what all do I need to file this year?

[1stimetaxdoer]

Hello, 

This is my first-time filing taxes for my LLC I started last year in Sept. I am currently employed at my current job and have a W2. What do I need to do to file my taxes? 

[DawnC]

Is it a single member LLC?   A single member LLC can file Schedule C (business profit and loss) with your personal income tax, Form 1040.

Or a multi-member LLC?  You need TurboTax Business to file Form 1065, partnership return.   The 1065 will generate K-1s for each member that get reported with each member's personal tax returns.   

[1stimetaxdoer]

Thanks. So I only need to file Form 1040? Is that covered with my Metlife Legal Plans? Also, if the a project isn't paid out yet, do I file my expenses for the project, or would it be a loss or profit? 

[RobertB4444]

Seems like you are a single member LLC which means that yes, you just file your form 1040 and while doing so you will add the section for 'self-employment income'.  That is where you enter the LLC information.

Since this is the first year for the LLC you have to decide when it was open for doing business.  If it was providing services and fully operational then you can deduct any of the expenses you had for running the business even if you have no income yet.  If it was not yet fully operational then any expenses that you have are considered 'start up expenses' and will be taken once the business is fully active and spread over the first 5 years the business is active.

@1stimetaxdoer 

[1stimetaxdoer]

Can you define "fully functional" and what do you mean the start-up expenses will be spread across 5 years? Like for example, once the business is "fully functional" and let's say the start up costs were $5,000, you would deduct $1k every year for 5 year in expenses? Is that what you mean? If the business was providing services, then it is fully functional? Or does fully functional entails something more? 

[RobertB4444]

Fully functional isn't really defined by the IRS.  I usually tell people that if you are building a store you aren't open until you unlock the door and start letting customers in.  You have to make that analogy fir your business and decide on what day you actually unlocked the door.

And you have it exactly right.  Startup costs can sometimes span years before a business actually opens its doors so you add those up.  In the year that the business starts the 'Startup costs' are added up and turned into an asset that is amortized over five years.  One fifth is deducted each year.

@1stimetaxdoer 

[EricaGastelum]

My husband started a Single Member LLC. I purchased the Turbo Tax Home and Business software which created a schedule C. Did I need this software to generate this form? Also, we live in California and are unsure of the filing requirements for the state. He does not have an EIN for California. Does he need one? 

[RobertB4444]

You bought the right version of TurboTax.

Yes.  California has a lot of requirements.  I recommend sitting down with an attorney or accountant in California and making sure that your husband is in good standing.

Here's the California business website.

@EricaGastelum 

[1stimetaxdoer]

Is it possible to file a 1040 with the government contracted tax software? If my business is a virtual business, can I deduct snacks/meals at my home office?

[1stimetaxdoer]

What is the pros and cons of delaying "opening doors" on my taxes? For example, is there a benefit in adding my expenses and considering them start up costs than filing my expenses now? Would I have to pay more in taxes, the next year because I have opened my doors on my taxes? I have done 1-2 projects for connections I had known but have not done any recruitment for new customers, so I am fully functional for the work I am doing for my current connections but do not have the infrastructure to accommodate new customers, thus not fully functional in that area. 

[DawnC]

You can file a 1040 with almost any tax software.  If you are already doing business, you are open for business and should file a return.   

Pub 583 - Start-up Costs

IRS Guide to All Business Expenses 

Things like free coffee, donuts, and snacks provided at the workplace, as well as onsite meals for employees working overtime, are considered “meals provided for the convenience of the employer.” In 2017 and prior tax years, these were 100% deductible. Under the Tax Cuts and Jobs Act (TCJA) that Congress signed into law on December 22, 2017, these are now 50% deductible in tax years 2018 through 2025, and nondeductible after that.   Businesses can fully deduct the cost of:

• Office parties and outings held for the benefit of its employees (other than highly-compensated employees)
• Meals and entertainment provided to employees as compensation and reported as taxable wages
• Meals provided by a restaurant

[Mike9241]

@1stimetaxdoer 

can I deduct snacks/meals at my home office, if you are not meeting with customers, then they would be personal expenses and not deductible.

start-up expenses are expenses incurred before you started your business. doing work for just one customer would mean you started your business. 

start-up expenses would likely include expenses incurred in forming the LLC. the following costs would also be included in start-up expenses (not all-inclusive): survey of potential markets, advertising the opening of business, fees paid in connection with starting the business, travel to secure distributors, suppliers and customers. 

the deduction or amortization for these expenses is covered by IRC 195 and starts with the year the business begins

 1) if $5000 or less they are fully deductible in the year the business starts unless the taxpayer elects to amortize them over 15 years by making an election

2) if the expenses are more than $5,000 but $50,000 or less, the excess over $5,000 is amortized over 15 years.

3) if the expenses exceed $50,000 the $5,000 deduction is reduced dollar for dollar by the excess (at $55,000 there is no current deduction)  but not below zero. whatever isn't deductible is amortized over 15 years. 

 on schedule C you would use the asset entry worksheet