How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Megan C Your Own Question

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13401
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
23669918
Type Your Tax Question Here...
Megan C is online now
A new question is answered every 9 seconds

If I convert my sole proprietorship to a single member llc

Resolved Question:

If I convert my sole proprietorship to a single member llc (disregarded entity) partway through 2013, when I file my taxes next year, do I need to file 2 schedule C's, each representing a short year or do I just use the new name and (EIN instead of SSN) on one schedule C and continue as if nothing else changed?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

Welcome to JustAnswer.com

MyVirtualCPA :

You will have 2 schedule C's. One using your social security number for the part of the year you had a sole proprietorship

MyVirtualCPA :

The other schedule C will be for your LLC

MyVirtualCPA :

Then, after the initial year you will only have one schedule C

MyVirtualCPA :

Is there anything else that I can assist you with today? If not, please rate my response as "excellent" so that I may receive credit for assisting you today.

Expert:  jgordosea replied 1 year ago.

Greetings,

 

Whether or not the sole proprietorship will just still file one Schedule C in the year of establishing a single member limited liability company (SMLLC) depends on whether or not the SMLLC chooses to be taxed as a corporation.

 

If the single member LLC does not choose to be taxed as a corporation then you will simply file as you always have. There is not any need to make two Schedule C as the SMLLC not electing to be taxed as a corporation is disregarded for income tax purposes. Disregarded means nothing changes in the tax reporting.

 

For more details see http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies

"For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or EIN for all information returns and reporting related to income tax."

 

If the SMLLC elects to be taxed as a corporation, the Schedule C will cover only the period prior to that election and the corporation will file a return for the period after the election is effective.

For more information see http://www.irs.gov/publications/p3402/ar02.html#en_US_publink1000244352

 

Please ask if you need more information or clarification.

Thank you.

Expert:  Megan C replied 1 year ago.
I am sorry, but I have to disagree with the previous expert. If you now have an EIN and do not use your SSN you would use two schedule C's to report your activity. One for your SSN and the other for your EIN.

The IRS will get information reports, and if you receive income under your LLC EIN then you will need to show that separate from the income in your own SSN so everything matches up nicely.

It's not REQUIRED to have two schedule C's, it will just make reporting and matching easier in the initial year of your LLC.

If you have further questions, please feel free to ask MyVirtualCPA. I'm here to help you.

Thanks again for using JustAnswer.com and sorry for any confusion caused. Please rate my previous response as "excellent" so that I may receive credit for assisting you today.

Thanks again!
Customer: replied 1 year ago.


This is why I asked the question. I have received conflicting answers from a variety of sources...If I did file 2 schedule C's would there be a change in the way depreciation is handled for the LLC. i.e. if I had an 5-year item with 2 years of prior depreciation, would i just continue over the next 3 years or would the LLC have to start over and depreciate the balance over 5 years?

Expert:  Megan C replied 1 year ago.
You would not start everything over; everything transfers with the same attributes that you previously had in your sole proprietorship

Essentially nothing changes; Your entity selection is disregarded for tax purposes and is like you continued on with the same name. There is no REQUIREMENT to do 2 Schedule C's on your return, but I would do so to match the revenues to the EIN or social security number they were earned on.

However, your basis and depreciation will all transfer over. There's no need to start over.

Again, I'm sorry for any confusion that you may have in this regard. Perhaps I should have been clear that there is no REQUIREMENT to file two schedule cs, just a matter of preference.

Please take a moment to rate as "excellent" so that I may receive credit for assisting you today. Thanks again for using JustAnswer.com and have a great day.
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 13401
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 7 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thank you for the positive rating and the bonus. Please come back and see me if you ever need another question answered, I can also answer any finance or social security question that you might have. It was a pleasure working with you today and I hope you enjoy the rest of your day.

Thanks again.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.