Award Winning CPA Asks: Is 2011 the Year Your LLC Converts to an S Corporation for Tax Purposes?
| LLC’s can Legally Convert to an S Corporation by the timely filing of IRS Form 2553 or by being aware of the tax rules regarding the filing thereof. Limited Liability Company legislation was passed in Georgia approximately two decades past. Though the LLC does allow for some greater flexibility and ease of operation it often results in a higher tax obligation that might not have been incurred if the business was an S Corporation.
Per IRS legislation all the earned income from an LLC as being subject to both FICA & Medicaid taxes whereas an S Corporation has to pay those taxes reflected on W-2’s. For tax purposes, the law allows an S Corporation to legally convert to being an S Corporation as long as all active employee/owners pay themselves a fair and reasonable salary. This number is best determined by the facts, position, and profit of a business and the truest test of this calculation is what a business owner would have to pay someone else to perform their position.
Each and every business is unique and therefore all saving opportunities are different. But even the smallest of businesses with the smallest of profits may save tax dollars by converting from an LLC to an S Corporation.
To qualify to be an S Corporation you are required to:
-Have a December 31st year-end.
-Have less than 100 shareholders.
-Have shareholders who are U.S. citizens or resident aliens.
-Have only one class of stock.
His CPA PC provides a free initial consultation to see if converting your business to an S Corporation for tax purposes makes sense to you. Put our decades of experience to work for you ensuring you pay your lowest legal possible tax. |
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John Dillard, CPA of His CPA, PC (An Atlanta CPA firm) 1940 Woods River Lane, Duluth, GA 30097 Phone 770-814-9304 http://www.hiscpa.com/ Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!
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This entry was posted
on Monday, January 31st, 2011 at 8:19 am and is filed under Business/Tax Consulting, Financial Planning, Business Loans & Money Management, Financial Statements & Bookkeeping, Incorporating in Georgia & Entity Selection.
Tags: Atlanta/Gwinnett CPA, Earned Income, IRS Form 2553, LLC, LLC to an S Corporation, Rules of Being an S Corporation, S Corporation, To Qualify to be an S Corporation. You can follow any responses to this entry through the RSS 2.0 feed.
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