How do I know what tax classification my LLC has? Never filed any form to select one

Oh thank goodness! That's such a relief. So just to be super clear - since I never filed anything to elect a different status, I automatically have the pass-through classification and just need to file Schedule C with my personal return? Also, do I need to file anything special for my state taxes given that I have an LLC registered there?

Yes, that's exactly right! Since you never filed anything to elect a different status, your single-member LLC is automatically treated as a disregarded entity with pass-through taxation. You'll report all business income and expenses on Schedule C with your personal tax return. For state taxes, it varies depending on which state you're in. Many states follow the federal classification and treat single-member LLCs as pass-through entities, but some have additional requirements like annual LLC fees or franchise taxes that are separate from income taxes. I'd recommend checking your specific state's department of revenue website or consulting with a local tax professional to make sure you're meeting all state requirements.

How exactly does the document analysis work? Like do I need to have my EIN paperwork and everything or is just the LLC formation certificate enough? I'm in a similar boat and completely lost.

Sounds interesting but I'm skeptical... does it actually tell you if you've made the right elections for your situation? I'm worried I messed up by not filing anything when I formed my LLC two years ago.

The document analysis is pretty straightforward - you can upload your LLC formation documents, EIN confirmation, any previous tax filings, and even your operating agreement if you have one. While the LLC formation certificate is helpful, having your EIN paperwork definitely gives you a more complete analysis. It absolutely tells you if you've made the right elections for your situation! That was actually the most valuable part for me. It reviews your current default classification, analyzes your business financials, and then explains the tax implications of your current status versus other options. In your case, if you didn't file anything specific when forming your LLC two years ago, you're almost certainly operating under the default classification (disregarded entity for single-member or partnership for multi-member), but the tool would confirm that for your peace of mind.

Wait, how does this actually work? I've literally never been able to get through to the IRS no matter what time of day I call. Do they just keep calling repeatedly until they get through?

Sorry but this sounds like BS. The IRS phone system is specifically designed to prevent this kind of line-cutting. If it was this easy to get through, everyone would be doing it. I'll stick to waiting on hold for 3 hours like everyone else.

They use an automated system that essentially waits on hold for you. It navigates through all the IRS phone menu options and stays on the line until a human agent is about to pick up. At that point, it calls you and connects you directly to that agent. It's not line-cutting - you're still in the same queue as everyone else, but you don't have to personally sit there listening to the hold music. I totally get the skepticism - I felt the exact same way! But the difference is that their system can dial repeatedly during the optimal times when call volume is lower and can stay on hold indefinitely, which is something most of us can't do. It's basically just outsourcing the frustrating part of the process. Nothing magical, just clever use of technology to solve a really annoying problem.

I'm in Colorado. I did see something about an annual report fee of $10, but nothing about special tax treatment. Does Colorado follow the federal classification?

Yes, Colorado generally follows the federal tax classification for LLCs, so you'll be treated as a disregarded entity for state income tax purposes too. The $10 annual report (called a "periodic report" in Colorado) is just a fee to maintain your LLC's active status with the Secretary of State, not related to your tax classification. Colorado is actually one of the more straightforward states for LLC taxation - they don't impose any additional franchise taxes or minimum taxes like California or some other states do. You'll just report your business income on your personal Colorado state tax return, similar to how you handle it on your federal return.

How complicated is it to switch to S-Corp status? Is it just filing a form or does it create a ton of additional paperwork and requirements?

To elect S-Corp status, you need to file Form 2553 with the IRS within 2 months and 15 days of the beginning of the tax year you want the election to take effect (or within that timeframe of forming your LLC). The additional requirements are definitely more complex than staying as a disregarded entity - you'll need to run payroll for yourself (with proper withholdings), file quarterly payroll tax returns (Form 941), issue yourself a W-2, and file a separate business tax return (Form 1120S) instead of just using Schedule C. You also have to be very careful about paying yourself a "reasonable salary" because the IRS scrutinizes S-Corps to make sure owners aren't trying to avoid payroll taxes by taking everything as distributions. But if you're making good profit, the SE tax savings can definitely make the extra paperwork worth it!

This is so reassuring to hear from someone who went through the same thing! I've been losing sleep over this thinking I missed some critical deadline or form. The disregarded entity status sounds perfect for my situation since I'm just getting started and want to keep things simple. Quick question - when you mention keeping good records for Schedule C, do you have any recommendations for tracking business expenses? I've been pretty informal about it so far (just saving receipts in a shoebox basically) but I'm realizing I need to get more organized before tax time. Also, the self-employment tax piece is something I definitely need to research more. I had no idea that was separate from regular income tax!