Welcome. My name is XXXXX XXXXX it will be my pleasure to assist you with your tax question today.
The proper procedure is to file the 2011 tax return for 2011 as soon as possible, including issuing the K-1s to each member. Even though your question states that you have reported the income from the LLC, each of you will need to amend your 2011 tax returns to include the information from the K-1s in a proper manner.
As to 2012, the procedure will be the same as for 2011. Once these returns are filed and your personal returns are amended, you will be up to date on all tax returns.
As to the penalty involved for late filing of the 2011 return, my advice would be to file the return with a detailed letter of explanation respectfully XXXXX XXXXX of any penalties. You will want to be sure to include in your letter that late filing of the 2011 return was NOT willful neglect to do so, and you will also want to emphasize that you promise to file all future tax returns in a timely manner. I would not estimate any penalty payments when submitting the 2011 return with your letter. Give the IRS time to review the facts, and let them determine if they will abate any/all of the penalty involved.
By the way, even though your question did not address 2010, you will also need to file a tax return for 2010. Since your question states you had no income until 2011, you will still need to file a return and issue K-1s, even if all amounts are 0. In that case, there will be no need for each of you to file amended personal tax returns.
Please let me know if you require further assistance or clarification.
Thank you and best regards,