Single Member LLC and S Corp


V

Vijay Sharma

Does a single owner of an S Corp file Form 1040 and Schedule
C like a single owner LLC does?

For a single owner LLC filing Form 1040 and Schedule C,
where (line #) does he report guaranteed payments as income?

I am assuming that guaranteed payments as expenses probably
go to Schedule C in part II under Expenses on line 27 as
"Other Expenses" and Ordinary Income (Net Profit) goes from
Schedule C to line #12 of Form 1040 as Business Income.

Although distributions paid by a LLC are not taxable (income
tax or self-employment tax), where would these be reported
if LLC is filing Form 1040 and Schedule C?

If a single owner of an S Corp files Form 1040 and Schedule
C, are the business (ordinary) income and distribution
reported in the same manner as that of a single member LLC?
I am assuming salaries received (income) by the owner via
his/her W-2 in an S Corp would only be reported on line 7 of
Form 1040 and not on Schedule C as well.

Thanks in advance for your help.
 
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K

KJ Nichols, CPA

Vijay said:
Does a single owner of an S Corp file Form 1040 and Schedule
C like a single owner LLC does?
No, the S Corp will prepare Form 1120S and provide the
shareholder with a K-1 to report the income on Form 1040 and
Schedule E.
 
Last edited by a moderator:
K

Katie

Vijay said:
Does a single owner of an S Corp file Form 1040 and Schedule
C like a single owner LLC does?
KJ answered that one.
For a single owner LLC filing Form 1040 and Schedule C,
where (line #) does he report guaranteed payments as income?

I am assuming that guaranteed payments as expenses probably
go to Schedule C in part II under Expenses on line 27 as
"Other Expenses" and Ordinary Income (Net Profit) goes from
Schedule C to line #12 of Form 1040 as Business Income.

Although distributions paid by a LLC are not taxable (income
tax or self-employment tax), where would these be reported
if LLC is filing Form 1040 and Schedule C?
It makes no sense for a single-member LLC (SMLLC) to make
guaranteed payments. Everything flows straight through to
the single member. The LLC's gross receipts and expenses
are reported on Schedule C. The owner pays income tax (and
self-employment tax) on the net income. "Distributions" from
an SMLLC are the same as withdrawals by a sole proprietor
from his business. No tax effect whatever, and not reported
anywhere.
If a single owner of an S Corp files Form 1040 and Schedule
C, are the business (ordinary) income and distribution
reported in the same manner as that of a single member LLC?
I am assuming salaries received (income) by the owner via
his/her W-2 in an S Corp would only be reported on line 7 of
Form 1040 and not on Schedule C as well.
The single member of an LLC cannot be an employee of the LLC
and does not receive a salary. The sole shareholder of an S
corporation IS an employee (assuming he or she performs
services for the corporation) and DOES receive a salary.
The S corporation deducts the stockholder/employee's salary
as an expense. The stockholder reports the salary on Form
1040, Line 7. If the S corporation has net income (or net
loss) after deducting the stockholder's salary, it is
reported on Schedule E. The stockholder of an S corporation
does not file Schedule C.

Katie in San Diego
 
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S

Stuart A. Bronstein

KJ Nichols said:
Vijay Sharma wrote:
No, the S Corp will prepare Form 1120S and provide the
shareholder with a K-1 to report the income on Form 1040 and
Schedule E.
Note that an LLC is not recognized for federal income tax
purposes. As a result, and due to its structure, an LLC may
elect either to be taxed as a partnership, a C-corporation
or even an S-corporation.

Stu
 
Last edited by a moderator:

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