New listener here…I have been running a sole prop IT remote support side hustle for the past 10 years, averaging $35K per year with a dedicated business bank account.
Recently I started a new W2 job and in doing so, the employer I left, asked if I’d be interested in doing side hustle for them since that was one of the main reasons I left, not enough work for a FTE. I gladly accepted and knew my overall hustle income would more than double so I quickly formed an LLC with S Corp election and EIN with a separate business bank account, which has an effective date of 7/10/2023.
My 1099 income that was earned against my sole prop from 1/1/2023 to 6/23/2023 was $25,338. All income after that is getting paid to my LLC (estimate $56K for a total of $82K in 2023).
My question is: Since the new LLC and S Corp election was not in effect for the entire year, even though 68% of the side hustle is paid through it, will the estimated $82K earnings for the year be taxed as a sole prop?
Thank you for all the great content…wish I would have found you guys sooner!!