IT'S NOT TOO LATE TO MAKE YOUR LLC TAXED AS AN S-CORP FOR THIS ENTIRE VEAR!

Are you a small business owner who operates as a Limited Liability Company (LLC) for tax purposes? Did you know that it's not too late to make your LLC taxed as an S-Corp for this entire year? Making this change can have significant benefits for your business, including potential tax savings. In this blog post, we will explore what it means to be taxed as an S-Corp and why you should consider making the switch.

What is an S-Corp?

An S-Corp, short for S-Corporation, is a special type of corporation that is recognized by the Internal Revenue Service (IRS) for tax purposes. Unlike a traditional C-Corporation, an S-Corp is not subject to double taxation. Instead, the profits and losses of an S-Corp are passed through to the shareholders, who report them on their individual tax returns.

Why should you consider making your LLC taxed as an S-Corp?

There are several reasons why you might want to consider making your LLC taxed as an S-Corp:

• Tax savings: By being taxed as an S-Corp, you may be able to reduce your self-employment taxes. Instead of paying self-employment tax on your entire net income, you can pay yourself a reasonable salary and take the rest of the profits as distributions, which are not subject to self-employment tax.
• Legal protection: Operating as an LLC already provides you with limited liability protection, but being taxed as an S-Corp can offer an additional layer of legal protection for your personal assets.
• Perceived professionalism: Being taxed as an S-Corp can give your business a more professional image, which may be important when dealing with clients, partners, or investors.

How do you make the switch?

Making your LLC taxed as an S-Corp is a relatively simple process. Here are the basic steps:

1. File Form 2553: You will need to file Form 2553 with the IRS to elect S-Corp status. This form must be filed no later than two months and 15 days after the beginning of the tax year in which you want the election to take effect.
2. Meet eligibility requirements: To qualify for S-Corp status, your LLC must meet certain eligibility requirements, such as having no more than 100 shareholders and only having eligible shareholders, such as individuals, certain trusts, and estates.
3. Obtain shareholder consent: All shareholders of the LLC must consent to the S-Corp election.

Don't miss out on the potential benefits!

If you have been operating your business as an LLC and haven't considered the tax advantages of being taxed as an S-Corp, it's not too late to make the switch. Consult with a tax professional or an attorney to determine if this change is right for your business. By making the switch, you could potentially save on taxes, protect your personal assets, and present a more professional image to the world.

So why wait? Take advantage of the opportunity to make your LLC taxed as an S-Corp for this entire year and reap the benefits!

If it makes sense for you to be an S-corporation for general tax purposes, you can make a special election to treat your LLC as an S-corporation back to the beginning of the year.

Now, if you haven't already formed the entity you can't go back in time and create an LLC--but if you have an LLC you should consider if this is the right move for you.

Image source: example.com