Disregarded LLC Their question is about income tax

Where the classification is already written

A domestic company with one owner is ignored for federal income tax unless someone filed to treat it as a corporation. Ignored, here, means the profit and the costs ride on the owner's own return. The company still has a name, a certificate, and a bank account. The tax life and the legal life are roommates, not twins.

That is the sentence their box is fishing for. If last year's return put the activity on your personal return, a yes is often the honest description of the income-tax life, and it says nothing about closing the company. If last year's return was a partnership return or a corporate return, a yes is the wrong description, even when you are the person who does all the work.

Glossaries stop at the definition. The form in your hand does not. The vendor will use your answer to decide whose name goes on an information return, whose tax identification number they store, and which follow-up questions their software asks next. A careful yes and a careful no both have a paper trail. A casual one has a mess.

A one-line map, with the figures left blank

Put the prior return on one side of a sheet. Put their exact sentence on the other. Do not add a third column for what you wish were true. If the return was a personal return and the activity was a trade, the yes usually matches. If the return was a partnership return, the yes usually does not. If you cannot find a return, you do not have a map yet, and the box waits.

We do not need the dollar lines to start. We need the form number on the face of the return and the sentence they wrote. The rest of the return can stay in the drawer until a month is actually being closed.

What we will not do with that map

We will not check the box. You will, after you have heard the reading. We will not tell a bank we represent you. We will not turn the reading into an assurance report if the next paragraph of their form asks for one. Those limits are the reason the first call can be short.

If the map and the box disagree, the books are the place the disagreement gets repaired. A dropdown in the software that says one thing while the return says another is a bookkeeping fix. It is not a reason to form a second company on a Tuesday night.

How to hold the two papers

Lay the face of last year's return on the left and their sentence on the right. The left page already chose a life. The right page is asking you to describe that life in their words. If both sides name the same life, you can answer. If they do not, the box stays empty until you can say why in one plain line. A third stack of papers, the agreement or the bank's welcome kit, can wait on the chair. Those papers matter when a month is closed. A return that was already signed stays the return, even while those extra papers wait on the chair.

Read their sentence out loud once before you answer it. A question you can repeat without looking is a question you understand. A question you cannot repeat is a question to send to us with the numbers covered. The certificate still proves the company exists while you do that. Nothing about a slow answer closes it. Nothing about a fast answer files a new status. The only thing a fast answer can do is teach their file a story you then have to correct in January.

When the two papers agree, the reply can be short. Name the return you signed, say the company remains as the state has it, and stop. When they disagree, the reply is the same length and a different ending. You are confirming, and you will answer when the reading is finished. Either reply is a finished use of this page. A new company is not the reply. A slow answer leaves the certificate in the drawer while their file waits.