how to handle LLC that though was s-corp and took payroll
Client on extension - calls me last week ready to submit all his paperwork to compete his return. (we have been reminding all clients once a month since May to get me their paperwork) Has been filing a sch c LLC for several years. Tells me he submitted paperwork to become and s-corp starting 1/1/25 but never received any notices. He also worked with a company call Opolis to do payroll and be able to get health insurance. (No, he didn’t discuss this before doing it even though we all know we tell them to). So, I tell him we need to get the answer to if he is an s-corp or LLC. He sends email that he got through to irs and he filled out paperwork incorrectly and he is still a disregarded entity. (he does his own books as well)
So here we are on 10/12/26 and I have a w2 for him which is incorrect for the LLC. And a P&L for 2025. NOW WHAT? How do I fix? (he did not take any payroll yet for 2026 so I told him not to)
Input the w2, reclass the payroll expense to owners draw and just expense the payroll processing fee? Take the amount on the w2 for health insurance as a self-employed health insurance deduction.
Sorry but the coffee just isn’t enough to get my brain working on this correctly
