Certain taxing jurisdictions, such as California, have an egregious tax system that penalizes LLCs with additional taxes. An S Corp election might avoid this or significantly reduce this (in California, a garden-variety LLC is a dirty word). ...
S corp Owners of S corps who actively work for the company must be compensated via payroll and with a reasonable salary. Beyond salary, they can take company profits as distributions. Taxation LLC An LLC with no special tax election is taxed as a sole proprietorship or a partnership, depend...
LLCs may choose to be taxed as a C corporation or S corporation by filing a document called an "election" with the IRS. Once this is done, as far as the IRS is concerned, the LLC is the same as a
LLCs have more tax election options than corporations. Corporations are taxed as C-corps by default. However, they can also opt to file paperwork with the IRS to be taxed as an S-corp if they qualify. Single-member LLCs are taxed as sole proprietorships, and multi-member LLCs are taxed...
Apart from special tax treatment, S-corporations have strict restrictions. For instance, S-corp shareholders must be US citizens, specific trust & estates, or organizations with tax-exempt status. For that reason, consult attorneys to inquire whether your company qualifies to form an S-corporation...
Normally, all an LLC’s profits are subject to self-employment taxes. Alternatively, with the S Corp tax election, only owners’ salaries and wages are subject to Medicare and Social Security taxes. Compensation paid as distributions to members is subject to federal income tax but not self-...
Most of the taxes that your LLC deals with will be at a federal or state level, but it’s important to note that there are also several local taxes you may come across, such as: Property Tax: Your business will need to pay this tax if it owns or uses any real estate and tangible...
A business’s goals will impact whether the S Corporation election is a good fit. I encourage business owners to discuss the pros and cons with their attorney and tax advisor. Some situations when it might be advantageous for a C Corporation to elect S Corporation status are: ...
In this article, learn about LLC taxation options including: Disregarded Entity Status, the Partnership Tax, and S-Corp Election.. Read More Share: Facebook Twitter LinkedIn Older Entries >> 400K+ COMPANIESFORMED A+ BBBRATING CLIENTSLOVE US! 40+ YEARS INBUSINESS 16192 Coastal Hwy. Lewes,...
you've received a certificate of incorporation showing that your business has been registered and incorporated, you must file form 2553 with the IRS. The form, called the Election by a Small Business Corporation, changes the company's tax reporting status if the Internal Revenue Service approves ...