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moving from sole prop to LLC mid-year — what tax mess am I walking into?

Started by handyman_jim_co · Apr 28, 2026 · 156 views · 3 replies
For informational purposes only. This is not legal advice. Laws vary by jurisdiction. Consult a qualified attorney for advice specific to your situation.
HJ
handyman_jim_coOP

handyman in colorado. been sole prop for 6 years. growing fast and want to form an LLC for liability protection. accountant said i should wait for jan 1 to avoid "messy" mid-year transition. but i have a big commercial job starting may that worries me liability-wise.

CP
cpa_off_duty

your accountant is overstating the complexity. SMLLC by default = disregarded entity for federal tax purposes. you keep filing schedule C, just under the LLC name. mid-year is fine.

main wrinkles: get a new EIN for the LLC, transfer business bank account, update insurance and contracts. file form 8832 if you want different tax treatment (S-corp election, etc).

RE
reno2025

also — get adequate liability insurance NOW. LLC alone doesn't substitute for commercial general liability. for a contractor doing commercial jobs, $1M-$2M CGL is standard.