Tax problem from single member LLC electing to be taxed as an S corp?

Since you elected to have the LLC taxed as an S corporation, it needs to file Form 1120S. Your share of the profit or loss will be reported to you on a K-1, which transfers to Schedule E of your 1040. Note, however, that any loss may be limited by your basis in the S corp.

I recommend that you consult a local accountant (not a storefront tax preparation company) whose practice includes taxation of individuals and small businesses. As noted in an answer above, payroll tax issues for you can come into play. An accountant can help get your situation corrected for 2011, and try to minimize any damage already done for 2010.

Taxation is a huge factor in any business.

You "misunderstand all the implications of electing to be taxed as an S corp." Why in world did you create a legal business entity when you have no idea what you're doing?

I have zero knowledge or skill when it comes to repairing cars. So I went out and opened an auto repair shop. What do I do now?

Somehow you got the bright idea to create an LLC, and probably heard somewhere that you should elect to be taxed as an S corporation, so you did it.

Why do people think this is so simple all you have to do is fill out a form and somehow that means a bunch of your problems will be solved?

Did you file Form 8832? If not you cannot even consider electing S corporation status.

Did you file Form 2553? If not you're a C corporation, not an S corporation.

Now you have employees. Are you sending withholding under a C corporation? Or an S corporation? Or as a sole proprietor?

Do you know how to unravel the payroll tax mess if you're not paying under the correct business entity?

If your financial well being is important, you need to get professional help with your business. Not just the tax return, but how to operate it. You can't just create a corporation and wing it when you don't know what the rules are.

If you have already filed the 2553 last year (the 8832 isn't needed for this anymore), you are an S-corp.

Yes, you needed to pay yourself a salary that was commensurate with the amount of work you did. You need to issue yourself a W-2 for the 4th quarter, update the 941s, etc. If you don't, the IRS can come back and RECLASSIFY your distributive income as wages anyway.

"Technically contrary" is not acceptable. You must follow the instructions. You are NOT a partnership. You can't check P. You are NOT a corporation and should not willy nilly try to claim you are when you aren't. You *are* a single member LLC, so you MUST put down your real name and SSN.

your best bet is to go to one of the "tax services" like H & R Block or Liberty. They are experts in the field and if they mess up your return, THEY will have to pay any penalties and interest imposed by IRS. Their fee is a small price to pay for peace of mind, and whatever fee you pay is deductible as a business expense in tax year 2011.