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Newly formed Single Person LLC (disengaged entity)

Newly formed Single Person LLC (disengaged entity)

Old Jan 1st 2015, 3:26 am
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Default Newly formed Single Person LLC (disengaged entity)

We saw a post here some time ago about this. We have it all set up here in Texas and wondering...what now.

1. Do I need an accountant? We do our taxes already on our own with Turbo Tax, and totally comfortable to continue doing so. Turbo tax can do this for us?
2. Do we pay estimated taxes in advance? We are going to be 1099'd. Company refuses to do W-4/W-2 path. This all begins Jan 2.

There was a thread some time ago where folks came on and said this isn't rocket science and talked about how it is pretty straight-forward to start up.

(Yes, I know there is a search function but I've come up with naught for this particularity.)

Thank you in advance!
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Old Jan 1st 2015, 3:59 am
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Default Re: Newly formed Single Person LLC (disengaged entity)

What exactly are you asking? ..... Can you form the LLC yourself or can you do the taxes yourself? ..... Or both?

An LLC is easy to form, especially if solely owned, but the taxes can be intricate and depending on the nature of the business, contracting the support of a CPA, at least for the first year would make a lot of sense.
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Old Jan 1st 2015, 4:03 am
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Default Re: Newly formed Single Person LLC (disengaged entity)

Disregarded not disengaged. Use the correct terms.


Federal taxes can be done on your own personal tax return via 1099 showing your income.
If you feel it can get complex with start up expenses, deductions such as mileage etc get the appropriate Turbo Tax version.

You don't need a CPA. But can if you want

You're supposed to pay Federal tax quarterly, as am I, but for simplicity I'm just doing it at tax time. There may/probably will be a fine but I believe it is small. And you don't get into trouble.

State taxes, that's separate, check your State's business portal. Here in CA I can do them online via the State website plus they send reminders in email.

Last edited by Hotscot; Jan 1st 2015 at 4:08 am.
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Old Jan 1st 2015, 12:37 pm
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Default Re: Newly formed Single Person LLC (disengaged entity)

Originally Posted by Bomjeito View Post
1. Do I need an accountant? We do our taxes already on our own with Turbo Tax, and totally comfortable to continue doing so. Turbo tax can do this for us?
Now that you have an LLC, you need to maintain the entity's records, including accounts, and work out how much needs to flow-through to your income tax return. Also manage the distributions from the LLC. You can either do that, or retain a CPA to do it for you.

As a general rule, taxation for self-employed persons and small business owners is more complicated than for employees. Also consider liability for self-employment FICA tax.

2. Do we pay estimated taxes in advance? We are going to be 1099'd. Company refuses to do W-4/W-2 path. This all begins Jan 2.
If you are a contractor (as distinct from an employee) then the company cannot do W-4/W-2. Have you got a contracting agreement in place, presumably in the name of the LLC? Have you provided a W-9, etc?

Estimated taxes. In general, you may be subject to interest and/or penalties if you owe more than $1,000 in federal tax when you file your tax return. However, there are a number of exceptions to this rule.
Estimated Taxes

There may be other compliance issues, either State or Federal, that you may need to consider as an LLC owner. Another reason to consult a competent CPA.
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Old Jan 1st 2015, 4:48 pm
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Default Re: Newly formed Single Person LLC (disengaged entity)

Originally Posted by Bomjeito View Post
1. Do I need an accountant? We do our taxes already on our own with Turbo Tax, and totally comfortable to continue doing so. Turbo tax can do this for us?
TT can do it but if you've been using the basic version then you'd probably need to upgrade to the one that includes small business accounting. For most small businesses it's not that difficult to do it yourself but as someone suggested above, hiring an accountant for the first year might help.

Originally Posted by Bomjeito View Post
2. Do we pay estimated taxes in advance? We are going to be 1099'd. Company refuses to do W-4/W-2 path. This all begins Jan 2.
Sort of behind actually. The estimates are based on the previous year and spread evenly in four equal(ish) payments, though I believe you can vary that. (California does three very uneven quarters which is distinctly odd - not sure about TX). You pay in April, June, September, January IIRC. Of course it's hard to estimate taxes if you don't have a previous year and I didn't pay anything until the end of the year (big bill) but I'm not sure if arriving in the US also had something to do with that.

I had a penalty last year for underpayment, about $2000 in tax and $70 in penalties IIRC. Lesson learnt - ensure intermediate payments are sufficient for the year. TBH the penalties aren't that severe, especially compared to the UK where the bar stewards gave me a fine in the hundreds for failing to pay some small amount while I was in hospital and (under the US definition) was legally blind at the time. No sympathy whatsoever from HMRC. Anyway, back to topic!

Last edited by GeoffM; Jan 1st 2015 at 4:54 pm.
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Old Jan 1st 2015, 7:36 pm
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Default Re: Newly formed Single Person LLC (disengaged entity)

Thanks for the info! And, yes, how funny iPad rearranged typing to disengaged from disregarded. I'm sure IRS would think that funny too. I'll try to edit the subject line for the proper word.

LLC is all set up - simple as can be online in Texsas. Mostly was wondering about estimated tax payments. We were incorporated in UK ( and used an accountant) and just not 100 percent sure about the system here, so just a sense check.

Thank you all. We have decided to do year one with CPA, mostly for convenience sake.

Eta: not able to edit original subject line to disregarded entity.

Last edited by Bomjeito; Jan 1st 2015 at 7:41 pm. Reason: IPad typos!
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Old Jan 1st 2015, 7:53 pm
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Default Re: Newly formed Single Person LLC (disregarded entity)

I think if you do a full reply (Go Advanced, rather than Quick Reply), you can change the title. It won't backdate through the thread but should apply thereon.

Ok, well mixed results. My post shows the changed title; the thread does not. That may be a quirk/design feature of this forum software as I know other forums do change the thread title.
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