Quick question for everyone - does anyone know if QuickBooks can handle this conversion properly? I'm trying to figure out if I need to make manual journal entries to adjust everything or if there's a built-in process for transitioning the books from LLC to S Corp. Our bookkeeper isn't familiar with this specific situation.

I just went through this exact conversion process six months ago and can share some practical insights. The key thing to understand is that you're essentially creating a brand new entity (the S Corp) and transferring assets from your old entity (the LLC). For Schedule L, you definitely need to complete both beginning and ending balance sheets. The beginning balance sheet shows your S Corp's position on day one (conversion date) with assets at fair market value. The ending balance sheet shows where you stand at year-end. Regarding retained earnings - this was the most confusing part for me too. Since you were an LLC, you don't actually have "retained earnings" in the corporate sense. What you had was owner's equity/member capital. When you convert, this becomes your initial capital contribution to the S Corp and gets recorded as paid-in capital, not retained earnings. Your AAA (Accumulated Adjustments Account) starts at zero on conversion day and tracks the S Corp's income/losses/distributions going forward. Don't try to carry over your LLC's accumulated earnings into AAA - that's not how it works. One more tip: make sure you properly document the conversion with corporate resolutions and keep detailed records of asset valuations. The IRS may ask questions later, especially if you have significant appreciation in assets. Good luck with your conversion!

Thanks everyone for all the detailed responses! This has been incredibly helpful. I had no idea about the distinction between "care" vs "education" costs or that our pre-k program might qualify for the Child and Dependent Care Credit. I'm going to contact our school's finance office tomorrow to ask them to break down our monthly $1,250 payment into care vs educational components. Since both my wife and I work full-time and our daughter is there from 8am-3pm, it sounds like a good portion should qualify as dependent care. I'm also going to look into whether my employer offers a Dependent Care FSA for next year - that could be a huge tax saver if we can set aside $5,000 pre-tax. For this year's taxes, I'll definitely explore using one of those AI tax tools mentioned to make sure I'm not missing anything. Really appreciate everyone sharing their experiences!

Great advice from everyone here! One additional thing to consider is timing - if you're planning to claim the Child and Dependent Care Credit, make sure you have all your documentation ready early in tax season. The IRS has been requesting more supporting documents for childcare credits lately. Also, don't forget that if your child turns 13 during the tax year, they only qualify for the dependent care credit for the months they were under 13. Since your daughter just turned 4, you're good for several more years, but it's something to keep in mind for future planning. Another tip: if your pre-k program offers summer care or extended year programs, those expenses can also qualify for the credit as long as they meet the same "care while you work" requirements. We used our school's summer program last year and were able to include those costs too.

This thread has been incredibly valuable! I'm in a very similar situation with my single-member S Corp and have been paralyzed by this decision for months. After reading through everyone's experiences, I'm convinced the Solo 401(k) is the right choice for maximizing retirement savings. One additional consideration I haven't seen mentioned - for those of us who might want to take early retirement or have irregular income years, the Solo 401(k) offers more flexibility for accessing funds. Unlike SEP IRAs, many Solo 401(k) plans allow loans (up to 50% of the balance or $50,000, whichever is less) and some allow hardship withdrawals. This could be a significant advantage for business owners who might need access to funds during lean years or business transitions. Also, I wanted to confirm something about the contribution calculations - when we say 25% of salary for the employer contribution, that's 25% of the net self-employment income for the employer portion, not the gross salary, correct? I want to make sure I'm calculating my potential contributions accurately before making the switch. Thanks again everyone for sharing your real-world experiences - it's so much more helpful than trying to parse through IRS publications alone!

Thanks everyone for the detailed discussion! As someone who just went through this exact decision process with my single-member S Corp, I wanted to add one more perspective that might help others in similar situations. I was initially hesitant about the Solo 401(k) because of the perceived complexity, but after making the switch from a SEP IRA last year, I can confirm it's really not that complicated in practice. The key is choosing the right provider - I went with Fidelity and their setup process was surprisingly straightforward, with good online resources and phone support when I had questions. One thing that really sealed the deal for me was running the numbers on tax savings. With my $50k salary, the Solo 401(k) allowed me to defer about $15k more in taxes annually compared to the SEP IRA. Even if I paid a few hundred dollars in extra admin costs, the tax savings more than made up for it. For anyone still on the fence, I'd recommend calling a few of the major providers (Fidelity, Schwab, E*TRADE) and asking them to walk you through the setup process and fee structure. They're usually very helpful in explaining how it would work for your specific situation. The peace of mind from maximizing my retirement savings while keeping all my options open for future tax planning has been worth the minor extra effort.

This is such a common confusion point for self-employed folks! I've been dealing with conference expenses for years as a freelance consultant. One thing I'd add to the great advice already given - make sure you keep detailed records of not just the receipts, but also the business purpose of each trip. The IRS likes to see documentation that shows the conference was directly related to your business. I always save the conference agenda, any certificates of completion, and notes about what I learned that I applied to my work. Also, if you're claiming meals during the conference, remember those are typically only 50% deductible (unless it's a company event where meals are provided to all attendees). The flight, hotel, and conference registration are usually 100% deductible as long as the trip is primarily for business. For your specific situation with the $3,200 in total expenses, that's definitely worth getting right on the timing. The cash basis method that others mentioned is definitely the way to go for most self-employed people - deduct when you pay, not when you use the service.

This thread has been incredibly helpful! As someone who's been self-employed for about 3 years now, I've always been paranoid about getting business travel deductions wrong. One thing I'd add that might be useful - if you're using a business credit card for these expenses, it makes the record-keeping so much easier. My business card automatically categorizes travel expenses and the statements clearly show purchase dates vs. service dates. It's been a lifesaver for situations exactly like yours where you buy tickets in December for February travel. Also, for anyone reading this who's newer to self-employment - don't forget that you can also deduct ground transportation to/from the airport (parking, rideshare, etc.) and even tips for hotel staff if they're reasonable. These smaller expenses add up over multiple business trips throughout the year. The key takeaway from all the great advice here seems to be: deduct when you pay (with some exceptions for multi-year prepaid services), keep excellent records with business justification, and when in doubt, consult the IRS directly or work with a tax professional. Better to get it right than deal with an audit later!

This is absolutely unacceptable and I'm furious on your behalf. What your employer did is not just "inconvenient" - it's straight-up illegal wage theft disguised as administrative convenience. They cannot retroactively reclassify you from W2 to 1099 after you've already worked as an employee for 8 months. You were clearly an employee based on everything you described - hourly pay, set schedule, working at their location with their equipment, them controlling how you did your work. The IRS has specific tests for this, and you pass every single one as an employee, not an independent contractor. The fact that they waited until December to ask about this "for easier accounting" is absolutely damning evidence. They knew you were an employee the whole time but decided to try to scam you out of $3,400 in taxes they're legally required to pay. Here's exactly what you need to do: Save that December email immediately - screenshot it, back it up, print it out. It's smoking gun evidence of their illegal intent. Then send them ONE professional email explaining that retroactive reclassification violates federal tax law and asking them to correct this by issuing a proper W-2 and paying the employer taxes they owe. Give them one week to respond. If they refuse or ignore you, file Form SS-8 with the IRS for an official worker classification determination and Form 8919 with your tax return to report their unpaid taxes. Don't you dare feel guilty about this. They're literally trying to steal thousands of dollars from a college student to avoid paying their legal obligations. You have an ironclad case - fight it and win!

This is absolutely outrageous and illegal! I'm so sorry you're dealing with this, but you need to know that what they did is called "worker misclassification" and it's a serious violation of federal tax law. They CANNOT just decide to reclassify you retroactively because it's "easier for their accounting." Based on everything you described - hourly pay, working at their location, following their schedule, using their equipment - you were 100% an employee, not an independent contractor. The IRS has very specific criteria for this, and you clearly meet all the employee qualifications. That December email asking to switch you is actually PERFECT evidence of their illegal intent. Save it immediately! Here's what I'd do: 1. Document everything - that email, your original job offer, pay stubs showing tax withholding, any communications about your work schedule 2. Send them ONE professional email explaining that retroactive reclassification is illegal and asking them to issue a corrected W-2 and pay their share of taxes 3. Give them one week to respond 4. If they refuse, file Form SS-8 with the IRS to get an official determination of your worker status 5. File Form 8919 with your tax return to report the uncollected employer taxes Don't feel bad about "causing trouble" - THEY caused the trouble when they decided to steal $3,400 from a college student to avoid paying their legal obligations. You have an ironclad case here. Fight this and make them do the right thing!