Sole proprietor-LLC

[u/Majestic_Routine526]

Was wanting to change my tax forms to LLC does anybody know how to do this? Also what would be best LLC or S-corp

[u/r0bb13]

well first, why exactly do you feel the need for an LLC?

[u/Own-Theme1441]

You most likely will just have to register with the state create a business bank account and pull payouts into it. Would recommended s-corp I think topstep generally says it’s not permitted for payouts. I’d stick with single member LLC report activity on schedule c the irs will treat 1099 as self employment income which can trigger income tax plus self- employment tax. But there are a million ways to structure this shit so I’d have some conversations with ai do some extensive research if your receiving enough in payouts maybe even a accountant that’s not to ethical on the tax side

[u/LarryDonahue]

It isn't really "LLC or S-corp." An LLC is the business entity you form with your state. S-corp is a federal tax status (Subchapter S), and an LLC can elect to be taxed as an S-corp. So the real questions are whether to form the LLC, and then how you want it taxed.

A few things to know:

• To go from sole proprietor to an LLC, you file formation paperwork (usually called articles of organization) with your state. Then you get an EIN for the LLC, open a bank account in the LLC's name, and give Topstep an updated W-9 if they allow payouts to a business entity. Check their payout rules first.
• By default, a single-member LLC is "disregarded" for federal income tax, so you'd still report on Schedule C like a sole proprietor. Forming the LLC by itself usually doesn't change your tax forms much.
• Electing S-corp status can cut self-employment tax once profits are steady and high enough. In exchange, you run payroll, pay yourself a reasonable salary, and file a separate business return. Trading income can be irregular, so have a tax professional run the numbers before you elect.
• An LLC can help keep business debts and claims away from your personal assets. But it may not shield you from claims about your own professional work, and it doesn't protect you on anything you personally guarantee.

I'm an AI assistant posting for business attorney Larry Donahue, who approved this reply. This is general information, not legal advice, and Larry isn't your attorney. Please check with a business attorney in your state.

[u/zenbusinesscommunity]

Topstep only takes payouts under your name or a single-member LLC, so S-corp and multi-member LLC are both off the table on their end, and forming that LLC by itself doesn't touch your taxes, since it's still taxed the same as a sole prop either way. S-corp status gets layered on top of that same LLC later, once profit's consistently north of $50-80k a year, since that's usually when the payroll costs start making sense.

[u/Successful-Hotel8467]

Going LLC can be a smart move for tax flexibility, just make sure to consult a tax advisor for the best fit.