USA Did I cheat myself? Elected my Single-Member LLC as "Sole Proprietorship"

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Hello AF,

I just started an ecommerce business. When I logged on to the IRS website to get an EIN I had to pick whether my Single-member LLC should be treated as an "S-Corp" or a "Sole Proprietorship". I had decisively elected the "Sole Proprietorship", however now I'm learning that making this choice would result in the profits of the business being treated as my personal income, which means higher taxes.

From other discussions, I'm hearing well, in Texas, if I had opted for the S-Corp taxation structure, I would have to pay something called Margin Tax. I got to tell yah, don't even know where to hang an anchor now. Really thought I was in the clear as far as forming the business entity without hitches.

As I was drawn to this type of structure due to it's "pass-through" taxation, did I cheat myself in not picking the "S-Corp" option? Thanks in advice guys for your assistance.

Also, can I change it back to an "S-Corp" since the EIN was just obtained on 11/29/2017
 

Drmdcpa

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You need a relationship with a CPA. Doing it yourself when you have no idea what you are doing can cause you to fail.

So many try to save a few dollars while stepping over thousands.

I generally do not recommend corporate status unless there is a liability issue or net income is above 60k.

The margin tax you mention has limits. Initially you probably would not be subject to any tax but still have a filing requirement.

Yes you can still elect S-status. Whether it makes sense to do so at this time is another story.

Since you are ecommerce a corporate status may cause additional problems when having sales in other states.

You are cheating yourself by starting and running a business without a CPA on your side.
 
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Thanks Drmdcpa. Ok, wow!! thought I missed the highway onramp there for a second. CPA is definitely somebody I'd consider very quickly in the near term.
 

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