I formed a single-member LLC back in March for my freelance design work. I thought the annual stuff would be obvious but I'm already confused. Do I file a separate LLC return? What about the annual report thing? My state's website is useless. I'd rather not pay an accountant $800 to answer two questions but I also don't want to get a letter from the IRS.
LLC Taxes
I started an LLC but don't understand the annual tax obligations
Single member LLC is typically a disregarded entity. That means the LLC itself doesn't file a federal return, you just file your normal 1040 with Schedule C attached.
Schedule C is the big one. Also self employment tax, which stung me my first year. Set aside more than you think you need
the annual report is a state thing, not federal. which state? because in some states it's due on your anniversary date and in others it's just a flat date.
Oregon. And by anniversary date do you mean of forming the LLC?
Oregon is annual report due by your anniversary date, yes. Its like $100. If you forget they eventually dissolve you, which is more annoying than expensive.
lol $800 for two questions. My accountant charges $400 to sneeze in my direction.
$400 is a bargain. Also don't listen to the 'you can just do it yourself' crowd for year one. One missed quarter of estimated payments and the penalties eat the savings. I learned that the hard way.
Do you have employes or is it just you? Because that changes a lot. If it's just you, payroll tax and unemployment insurance don't apply and people scare you about nothing.
Just me. No employees. Reading these replies is helping more than the state site did, honestly.
Just maake estimated payments quarterly if you're going to owe more than $1,000 for the year. First year people get surprised because they only paid once in April and then got a penalty for the quarters before that.
honestly the quarterly thing is the part nobody warns you about. I filed in April and then got a letter in July and my stomach dropped.
What grumpycactus said. Also, if you're making under a certain amount, sometimes you can skkip estimates and just pay the penalty, which is small. But 'small' is relative. Not advice, I'm just some guy on a forum.
One othe Oregon-specific thing: the annual report is not the same as your taxes. People conflate them and then wonder why they still owe money after filing the report.
The real tric is to keep a separate bank account and dump 25% of every deposit into it. Then tax time is boring instead of terrifying. But I also ate ramen for three months last year so take that with salt.
Also what do you guys do about the BOI report, didn't that get struck down or something? i keep seeing conflicting stuff and I'm not opening a letter that might be a scam.
The grace period for the BOI thing was weird this year, but as of writing it's basically 'don't panic.' It's separate from taxes anyway. The one thing I'll say is don't ignore any letter that has your LLC name spelled wrong, because that's usually a scam.