Can LLC elect to be taxed as S-Corp?

An LLC can choose to be treated as an S corporation in a two-step process: File a Form 8832, Entity Classification Election. This causes the business to be taxed as a C corporation. Then file a Form 2553 to elect an S corporation tax structure.

How does an LLC elect C Corp status?

Electing Corporation vs. To elect Corporation status, the LLC must file IRS Form 8832 – Entity Classification Election. To elect S Corporation status, the LLC must file IRS Form 2553 – Election by a Small Business Corporation.

Can an LLC be classified as as corp?

A Limited Liability Company (LLC) is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner’s tax return (a disregarded entity).

Why would LLC elect to be taxed as corporation?

The main advantage of having an LLC taxed as a corporation is the benefit to the owner of not having to take all of the business income on your personal tax return. You also don’t have to pay self-employment tax on your income as an owner from the corporation.

Should I change my LLC to an S Corp?

From a tax perspective, it makes sense to convert an LLC into an S-Corp, when the self-employment tax exceeds the tax burden faced by the S-Corp. In general, with around $40,000 net income you should consider converting to S-Corp.

Why would an LLC elect to be taxed as an C Corp?

The Internal Revenue Code makes it hard for pension funds to invest into entities that are taxed as partnerships if they carry on an active business. If your eventual goal is to get private equity money or venture capital, you should elect to be treated as a C-corp for tax purposes.

Should my LLC be taxed as an S Corp or C Corp?

A single-member LLC is considered a disregarded entity and is taxed as a sole proprietorship, filing Schedule C to for the individual’s personal tax return. A multiple-member LLC is taxed as a partnership.

Is it better for an LLC to be taxed as a corporation or partnership?

Can a single member LLC elect S corp status?

As a single member LLC, you can elect to be taxed as an S-Corp as long as the election is made no more than two months and 15 days after the beginning of the tax year you want the election to go into effect. You make the election on form 2553.

How does a single member LLC elect S corp status?

To elect S corporation tax status, you need to file IRS Form 2553, Election by a Small Business Corporation. You can file an election for S corporation tax status at any time after setting up your SMLLC. However, there are limitations on when the election can take effect.