My husband and I have a LLC but we are taxed as a S-corp. What is the correct tax procedure that we follow?

Answer 1

You will need to file a federal tax return for the LLC (Form 1120S), and any applicable state corp. tax returns, if any. The S Corp tax return will provide both you and your husband with K-1s, showing each shareholder's % of income/loss, and any pass-through items. You would report the information from these K-1s on your individual tax return (Form 1040). You would be subject to self-employment tax on your earnings.

Hopefully you have good records of everything (Quickbooks is a good software for small businesses). You should have an accountant prepare your S-Corp. tax returns.

The 2006 S-Corp tax returns were due 3/15/07. They should be filed as soon as possible as to not to incur any penalties.

Form 1120-S & instructions
http://www.irs.gov/pub/irs-pdf/f1120s.pdf
http://www.irs.gov/pub/irs-pdf/i1120s.pdf

Answer 2

Functionally an LLC or an S-Corp don't have much in the way of differences. They are both pass-through entities that do not pay taxes themselves; the income is passed directly to the members (LLC) or shareholders (S-Corp).

A single member LLC doesn't even require a special tax return; the income passes directly to Schedule C on your Form 1040. A multi-member LLC does require a Parthership return to apportion the income among the members but that's an information only return; the members claim the income and pay the taxes due on their Form 1040 tax return. With an S-Corp, the income is apportioned on the Form 1120S tax return and you both then claim it on your Form 1040.

Don't forget that you'll need to file separate Schedules SE, one for each of you, to calculate the Social Security and Medicare taxes as these need to be credited to your Social Security accounts separately.

Answer 3

The S-Corporation must file its own return. The S-Corporation will generate tax documents for you to use in your return. These documents include Schedules K-1 (one for each shareholder) for distribution of profits and losses, and Forms W-2 if you or your spouse are employees of the Corporation.

Use the documents generated by the S-Corporation return to prepare your individual or joint returns. Use a software package or a paid preparer.