LLC Tax ReturnCompany paper beside yours
Company paper and the return in your own name can both be genuine. Profit should be written once, on the paper the form number names, and the other paper should follow that figure.
Which paper holds the profit
If the company is disregarded, there is no separate federal income-tax return for the company. The activity is reported with your other items. The company books still have a job, because the figures on your own return come from that activity. People get into trouble by also filing a company return out of anxiety, and then reporting the profit again on their own form.
If the company files a partnership return or an S return, it issues you a K-1. Your return reports what the K-1 says. It does not report the company's deposits a second time on a schedule of your own. The K-1 is the handoff. Ignoring it, or duplicating it, is the whole defect.
A C treatment is different again. The company may owe its own tax, and money you take out may be wages or a dividend rather than a pass-through share. We do not assume which of these you have. We read the form number. Your memory of the opening meeting is a clue, not a filing.
Wages, draws, and the K-1 have to agree
On an S election, an owner who works in the company is expected to take reasonable pay as wages. Those wages show on a wage form and also reduce the company profit that passes through. A K-1 that ignores the wages, or wages that were never paid, will not survive a careful read. The fix is a provider you run, connected before the year ends, not a made-up figure in the week of the signature.
When wages are missing, a wage-based limit can also shrink a deduction the owner was counting on. A dollar saved is a thing we will say on a call with the file open, never as a figure printed here. We will say, on a call, whether the file in front of us has that shape. Bring the last payroll report if you have one, including a report that says there was no payroll.
Draws and distributions still have to roll through equity. A year of transfers to your personal account, with no account that records them, becomes a plug. Plugs feel like bookkeeping. On the signature page they feel like income you cannot explain. We would rather label the transfers in the month they happened.
Estimates are a third document
Vouchers you pay during the year belong to the year you are standing in. The return in your hand often belongs to the year that just ended. Owners pay a large estimate in a panic because the return looked large, and then discover the estimate belonged to a different year and a different form. Read the voucher the way you read page one. Year, form, and name.
After the return is filed, the useful next step is to reset the vouchers from the books you are keeping now. A percentage copied from last year's panic is not a method. A closed month is a method. We can do that reset in the same engagement, or we can stop at the signature if that is all you wanted.
Tell us, in the form, which papers are actually on your table. Company return, K-1, your own return, wage forms, vouchers. A list of what is present is more useful than a paragraph about how worried you are. The worry is understandable. The list is what we can work from.
Which return are you holding
You will be talking to the Steven Palmieri practice.