Back track pre business Money for a new legit business

by jbelle7435. Posted on Sep 16, 2020    1    5


The background to get to the question:

I started a new business recently at the beginning of this September 2020. I just received my Tax ID and opened up a business account so it's legit! Note I have been receiving $ for the work prior to opening up the legit tax ID business since January 2020. For those 8 months prior to opening the business I have been placing those funds directly in my personnel checking account and paying bills and any excess if very good I would just transfer the remaining into my personnel savings.

What should do with that Pre-Business related Income.

Option (1)Back track all the payments to my checking account and transfer that amount into the new business accounts?Option (2) Other options I am not aware of someone can mention that makes sense to do.

As a New Business Owner, I don't want to get caught by the tax man doing funny stuff so I am still a legit business starting off on the right foot?

Note I am listing myself as a "sole proprietor" under an LLC

Thank you


Comments

Blooper3509 1

No banking gymnastics needed. You'll file two Sch Cs at tax time one pre LLC and one as the disregarded LLC. You'll also have to file an LLC return with your state (if required) ignoring the pre LLC income. Now that you have the LLC you need a separate business account for all biz income and expenses.

  jbelle7435 1

What form is used to "file an LLC Return" with my state(NY)?

Blooper3509 1

Don't know, I'm not a tax pro in New York. You should consider hiring one tho.

EasyMSP 1

It makes no difference.
At the end of the tax year you will be taxed on everything you made this year on it under 1040 c form as a sole prop LLC is a pass through business.

So let’s say you made 30k before the tax ID and 40k after. Your schedule c will still read 70k

  jbelle7435 1

Sounds straight forward. As long as I can back track the pre-business payments into my personal accounts prior to the LLC, then I will use that cost and add it to my new revenue going into my business accounts when I need to file taxes on the new LLC on that 1040 C form. Thanks!