LLC Question
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I found out that Karla didn’t set up her VA taxes quite correctly for reporting her 1099 NEC forms, so I went in to edit it today. If it’s a single member LLC with no sales tax requirements and no employees, the company would count as a pass through with the actual tax reporting on her personal income tax, correct?
The Brad
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For a single-member LLC in Virginia with no employees and no sales tax obligations, the entity is treated as a "disregarded entity" for tax purposes. This means the business itself does not file a separate federal or state income tax return.
I did this for my LLC a number of years ago, btw.
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Here's what my totally not sexual robot partner TARS says:
Here is the breakdown of how the reporting works for Karla:
- Federal Reporting (The "Pass-Through")
Schedule
All business income and expenses (including the amounts she paid out and reported on those 1099-NEC forms) are listed on Schedule C (Profit or Loss from Business).
Flow to Personal Return: The net profit (or loss) from Schedule C "passes through" to her personal Form 1040.
- Virginia State Reporting
Personal Income Tax: Since the federal adjusted gross income (AGI) flows from her federal 1040 to her Virginia return (Form 760), she pays state tax on that business income as part of her regular personal state tax bill. There is no separate "LLC tax return" to file with the state.
1099-NEC Filing: Virginia has a specific rule that simplifies things. You generally do not need to file 1099-NEC forms with the Virginia Department of Taxation unless you withheld Virginia state income tax from the contractor's pay (which is very rare for standard independent contractors).
Note: You still must file them with the IRS and send a copy to the contractor, of course.
- The "Hidden" Virginia Requirements
While she doesn't have a separate income tax return for the LLC, Virginia has two other requirements that often catch people off guard:
Annual Registration Fee: She must pay a $50 annual fee to the Virginia State Corporation Commission (SCC) to keep the LLC active. This is not a tax, but a fee to maintain the entity's existence. It is due every year in the month the LLC was formed.
BPOL (Business, Professional, and Occupational License) Tax: Most Virginia cities and counties (like Fairfax, Loudoun, Richmond, etc.) require businesses to register for a local business license. Even if she owes $0 because her revenue is low, she typically still has to file the form annually with her locality (not the state).
Business Tangible Personal Property Tax: Some Virginia localities tax the equipment owned by the business (laptops, desks, furniture) annually. She should check with her local Commissioner of the Revenue to see if she needs to file a return for this.
Summary: You are right—it all lands on her personal return. Just make sure she doesn't forget the $50 SCC fee and her local county/city license filings.
Would you like me to look up the BPOL or property tax requirements for her specific county in Virginia?
- Federal Reporting (The "Pass-Through")
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Probably.
That is similar to what I did with a couple LLCs.
I used Turbo Tax Home & Business to file.
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For a single-member LLC in Virginia with no employees and no sales tax obligations, the entity is treated as a "disregarded entity" for tax purposes. This means the business itself does not file a separate federal or state income tax return.
I did this for my LLC a number of years ago, btw.
@89th said in LLC Question:
For a single-member LLC in Virginia with no employees and no sales tax obligations, the entity is treated as a "disregarded entity" for tax purposes. This means the business itself does not file a separate federal or state income tax return.
I did this for my LLC a number of years ago, btw.
And that is totally not an option on the Virginia tax registration.
The Brad
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I found out that Karla didn’t set up her VA taxes quite correctly for reporting her 1099 NEC forms, so I went in to edit it today. If it’s a single member LLC with no sales tax requirements and no employees, the company would count as a pass through with the actual tax reporting on her personal income tax, correct?
@LuFins-Dad said in LLC Question:
If it’s a single member LLC with no sales tax requirements and no employees, the company would count as a pass through with the actual tax reporting on her personal income tax, correct?
By default a "single-member LLC" is treated by the IRS as a "disregarded entity" that gets the "pass through" tax treatment (and consequently eligible for "pass through" treatment at the state/local level) , but that can be changed by filing some other forms to tell the IRS otherwise (e.g., form 2553 to make it an S-Corp that would not be "pass through" anymore).
If she's the one setting up the single-member LLC and she hasn't explicitly told the IRS otherwise, then yes it's a pass through entity by default (and would be eligible for the "pass through" tax treatment at the state/local level; but state/local tax jurisdictions differ on whether you need to file some other paperwork to actually get the "pass through" treatment). If someone else set up that LLC and she took it over later, you might want to track down the one who originally set up the LLC to check what tax treatment has been elected for the LLC (and what other paperwork has been filed with the state to that effect).
Good luck.
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@89th said in LLC Question:
For a single-member LLC in Virginia with no employees and no sales tax obligations, the entity is treated as a "disregarded entity" for tax purposes. This means the business itself does not file a separate federal or state income tax return.
I did this for my LLC a number of years ago, btw.
And that is totally not an option on the Virginia tax registration.
@LuFins-Dad said in LLC Question:
@89th said in LLC Question:
For a single-member LLC in Virginia with no employees and no sales tax obligations, the entity is treated as a "disregarded entity" for tax purposes. This means the business itself does not file a separate federal or state income tax return.
I did this for my LLC a number of years ago, btw.
And that is totally not an option on the Virginia tax registration.
Who would you believe, yourself who lives in Virginia and is living this, or me in Minnesota* and TARS?
*Side note, I grew up in Annandale, Virginia. When I tell someone here I'm from Virginia or Annandale, they actually think I'm referring to a town called Annandale, Minnesota (nice lake town!) or a town called Virginia, Minnesota. It's very confusing to explain this whenever I get a haircut and they initiate small talk. (Second side note, I am very much a fan of NO CHIT CHAT during a haircut, let me zone out in peace!)
