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I have a Georgia-based LLC established for a software

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Hello,I have a Georgia-based LLC...
Hello,I have a Georgia-based LLC established for a software engineering contract in California for $34,000, with the contract expecting to pay out after the beginning of September. I currently don't expect to be generating more income.My questions are:
1) Should I change my LLC to elect to be taxed as an S corp?
1a) If so, what is a reasonable salary if I elected the company to be taxed as an S corp?2) If my company elects to be taxed as an S corp, does the money it makes affect my adjusted gross income (line 37 on Form 1040)? I ask because the health insurance eligibility is affected by the number on line 37 of Form 1040.
2a) If it affects my adjusted gross income, does changing my tax year for my S corp election change when the adjusted gross income is reported?3) Does an LLC/LLC treated as S corp have to pay estimated taxes?
Submitted: 3 months ago.Category: Tax
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Answered in 9 minutes by:
8/1/2017
Tax Professional: Barbara, Enrolled Agent replied 3 months ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,065
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

As a sole member LLC, you report your income and expenses on Schedule C of your personal tax return.

If you elect S corporation status for the LLC, the S corporation will file its own tax return, and any profit/loss will be passed through to you personally. Any profit/loss is reported on your personal tax return.

Any income reported to you by the S corporation will affect your AGI.

LLCs and S corporations are very much alike. As an LLC, you would pay estimated taxes. As a shareholder of an S corporation, the IRS expects you to pay yourself a reasonable salary (W-2).

My best advice would be to remain an LLC.

Please see the following link for additional information that you will find helpful:

https://www.bizfilings.com/toolkit/research-topics/incorporating-your-business/s-corp-vs-llc

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 3 months ago
Thank you for your help Barbara!If the company is treated as an S corp with a tax year ending on 9/30, would I still count income earned after 10/1/2017 on my personal 2017 tax return?Do you have any advice on what a reasonable salary is expected to be? Is it based on a percentage of the company's earnings?
Tax Professional: Barbara, Enrolled Agent replied 3 months ago

Here's good information regarding fiscal year of an S corporation:

http://www.thetaxadviser.com/issues/2009/apr/scorporationtaxyearrules.html

A reasonable salary can be found on various websites for the type of work performed. It is not a percentage of the company's earnings.

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Tax Professional: Barbara, Enrolled Agent replied 3 months ago

Just following up with you to see if you have any other questions. If so, please let me know so I can further assist you.

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Barbara
Barbara
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