Question

Balance sheet

Forum|Forum|3 years ago
March 9, 2023
1 reply
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I started a Scorp 49/51% Me and Wife. opened Oct 2022 and have no employees. I am using turbo tax business and operate only in Alabama. the only activity my LLC Scorp had was 1858 total in paying the initial business privilege tax return in Nov 2022 and other supplies like paint and hangers and mops and stuff. basically, just contributions since paid for out of pocket and made no sales. how will my balance sheet work? no assets and no liabilities but for equity? turbo tax business has capital stock/ additional paid in capital/ treasury stock/ adjustments to shareholders equity. where will the 1858 in contributions go. I am doing balance sheet since alabama requires it. and how does share holder basis work? if the business starts with nothing and the only thing that happened is 1858 in supplies and business license stuff.

TurboTax Business Windows

M

Mike9241

and have no employees. Wrong. With an S-Corp the owner/manager/stockholder and anyone else active in the business is an employee for federal income tax purposes. those active in the business are supposed to get a salary. especially if they own stock. you are probably doing some things wrong from a bookkeeping and income tax standpoint. rather than file an incorrect return that can cause issues for years. consult with a tax pro to learn basic bookkeeping and other requirements like a salary, filing payroll tax returns, and maybe workmen's compensation insurance coverage since you are an employee and maybe your wife also if she's active in the business. generally, all states require employees even owners of corporations to be covered. failures to comply with federal and state laws in these areas can result in substantial fines in the thousands (possibly more) of $s.

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at the same time, you can ask about preparing form 7203 which may need to be included with your 1040 return. one for you and one for your wife and also about passive losses if your wife is not active in the business. if not active it's likely here share of any loss is not currently deductible.

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the return is due 3/15/2023 but you can file form 7004 to get a 6-month extension. late filing can result in a penalty of about $200/month/shareholder. usually, the IRS will abate this penalty the first time upon request but why go through this if it can be avoided!