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LLC taxed as an S Corp Question

Discussion in 'Legal Issues' started by seattle-west, Mar 21, 2016.

  1. #1
    I just filed for an LLC with my state and got my ubi. Now all I need to do is sign up for a ein number. I'm kinda confused though when signing up for an LLC that's being taxed as an S corp, for my ein do I file as an s corporation or file as an llc then elect s corp status? Thanks. I'm a sole owner btw.
    SEMrush
     
    seattle-west, Mar 21, 2016 IP
    SEMrush
  2. pmf123

    pmf123 Well-Known Member

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    #2
    an s-corp just means you pass the profit/loss thru to your (or you and all owners by %) personal taxes...

    but you have to file a form both federal and state to change your LLC to an s-corp (you are still an LLC, s-corp is just a type of LLC) before filing your annual...

    (if you forget, your accountant can also send a form to back date being an s-corp)
     
    pmf123, Mar 26, 2016 IP
  3. drestauro

    drestauro Member

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    #3
    LLCs and S Corps are different business designations. LLCs are pass through entities meaning that you file earnings on your personal return. Now I'm assuming when you are asking about an "LLC taxed as an S corp" you really mean to ask about the LLCs ability to be taxed at the corporate tax rate.

    It makes sense to do that if your personal tax rate is higher that 15%. The corporate tax rate of 15% only applies to the first $50,000 of earnings. From $50K-$75K is taxed at 25%. $75K-$100K is taxes at 34% and it goes up from there. So depending on your personal rate you would need to decide how much of your LLC earnings you want to use the corporate rate for. To do that you need to file IRS Form 8832, (Entity Classification Election) Along with your personal return.
     
    drestauro, Mar 26, 2016 IP
  4. Dailydriveco

    Dailydriveco Peon

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    #4
    If you have filed the paperwork for your LLC to be taxed as an s-corporation you will file Form 1120S and not Form 1065. Both LLCs and S-corps are pass-through entities so all income gets reported on your personal return. One benefit of the S-corp over the LLC is that you are only subjected to self-employment taxes on your wages from the S-corp as opposed to your net income from an LLC.
     
    Dailydriveco, Mar 27, 2016 IP
  5. Jacob Hawkins

    Jacob Hawkins Banned

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    #5
    As per Internal Revenue Service (IRS),” S Corporation is the corporation that elects to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes”. This means businesses are saved from “double taxation”, and the taxes are only levied at the corporate level.
     
    Jacob Hawkins, Jun 4, 2018 IP
  6. Petrea Dishman

    Petrea Dishman Peon

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    #6
    You elect s-corp status - if you haven't already, you complete form 2553 here: https://www.irs.gov/pub/irs-pdf/f2553.pdf
     
    Petrea Dishman, Jun 5, 2018 IP