FML’s Tax Checklist for LLC Start-Ups

By Justin Wilcox, CPA, Partner, Tax & Advisory Services
Aug 13, 2019

Designed for Single Owner/Member LLC

Part I – Pre-Filing Action Items (should be taken care of ASAP when forming your Start-Up)

  1. See attorney – Organize as a LLC in Delaware (or other jurisdiction as advised by your attorney).
  2. See attorney – Register with CT Secretary of State as a foreign LLC (if not organized in CT).  
  3. Obtain a U.S. Federal Employer Identification Number (EIN).    https://sa.www4.irs.gov/modiein/individual/index.jsp
  4. Obtain a business bank account to track business expenses separately (bring EIN confirm letter and legal formation docs). 
  5. Determine if university awards/stipends are taxable to you as the founder/recipient or the LLC as the recipient.
  6. Register for Business Entity Tax with CT Department of Revenue Services (DRS). https://drsbustax.ct.gov/REG/REGISTRATION.ASPX
    Warning – Be careful regarding registering for sales/use tax or withholding tax – you can always add these later when you have CT sales, out of state purchases or begin processing CT payroll.
  7. Set up your CT DRS Online Account using your CT Tax Reg. number and the PIN number the CT DRS sends in the mail. https://drsbustax.ct.gov/AUT/welcomebusiness.aspx

Part II – Tax Filing Due Date Listing (Filed in 2020 to report activity for Calendar Year 2019)

  1. Form 1099-MISC – Two filings to both recipients and IRS, first due date is January 31, 2020 (To report payments the LLC made in 2019 to a “recipient” typically for services or rent – i.e. contractor, lessor, attorney, CPA, etc.)
  2. Personal Income Tax Returns of Owners –Due April 15, 2020 (Business Tax Return Considerations)
    • Business owner calculates income/expense of LLC on Schedule C of the personal tax return, including a separate calculation of self-employment tax.
    • If profitable, review 20% Section 199A deduction on Form 1040.
    • All other elements of your personal tax return apply, this is just general guidance for LLC reporting.
  3. Delaware Franchise Fees – Due June 1, 2020 (Minimum fee)
  4. Connecticut Annual Report – Secretary of State  (List of officers/directors)
  5. Connecticut Business Entity Tax – 2019-2020 Form Due on April 15, 2021 (Biennial fee applies every other year)

Part III – Other Common Tax Filings – Review periodically (list is not all inclusive)

  1. Connecticut Sales Tax – Revenue:  When you expect to have sales to CT customers, filing frequency could be as common as monthly. https://portal.ct.gov/DRS/Businesses/New-Business-Portal/Managing-Sales-Tax#how
  2. Connecticut Sales/Use Tax – Purchases: If you purchase products online/out of CT without sales tax charged equal to the CT sales tax rate, you may be subject to Use tax liability in CT. See link above.
  3. Federal and Connecticut Payroll tax filings: Payments to yourself as the single member LLC owner are disregarded, and thus the payments should not be processed through payroll as a “W-2 employee.” However, payroll/W-2 applies if you set up U.S. payroll for salaries of non-owners (typically the Federal and State payroll tax filings are handled internally using payroll processing software, or through a 3rd party payroll provider).
  4. Profitable Entities: Estimate are due to the IRS and State of CT quarterly. IRS and CT estimates will be paid by the individual owner (based on expected LLC income and other personal return income that is not withheld on).
  5. Property Tax – If spending significantly on furniture/equipment, consider the applicable property tax rules and contact your town.

Related:

FML’s Tax Checklist for LLC Start-Ups with Two or More Owners
FML’s Tax Checklist for C-Corporation Start-Ups