Lucho Posted October 18, 2014 Report Share Posted October 18, 2014 If a single or multiple LLC wants to be treated as a Corporation for tax purpose, what extra paper work would be needed besides the LLC documents. I just want to be ready to answer basic tax question and documentation that will be required to form the business my client is in the process to open (A bicycle shop). I know he will need a lawyer to draft the paperwork but he wants to have a consultation with me before. he has been an employee for about 20 years in the same field. Thank you for any help. Lucho Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted October 18, 2014 Report Share Posted October 18, 2014 What kind of corporation? Quote Link to comment Share on other sites More sharing options...
easytax Posted October 18, 2014 Report Share Posted October 18, 2014 You will probably need form 8832 (unless you do a sub S corp. - exception in directions). See this URL for discussion (jumping to the proper type (single, corp., etc.) at the top right under "Related Links"): http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Limited-Liability-Company-LLC You also might want to review Pub 3402 which can be found here: http://www.irs.gov/uac/Publication-3402,-Taxation-of-Limited-Liability-Companies One of the things will be timing as some election options can only be done not more than 75 days before or more than 12 months after election filing. Easy read, just step through the material. 2 Quote Link to comment Share on other sites More sharing options...
Lucho Posted October 18, 2014 Author Report Share Posted October 18, 2014 What kind of corporation? C corporation or S corporation Lucho Quote Link to comment Share on other sites More sharing options...
Lucho Posted October 18, 2014 Author Report Share Posted October 18, 2014 You will probably need form 8832 (unless you do a sub S corp. - exception in directions). See this URL for discussion (jumping to the proper type (single, corp., etc.) at the top right under "Related Links"): http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Limited-Liability-Company-LLC You also might want to review Pub 3402 which can be found here: http://www.irs.gov/uac/Publication-3402,-Taxation-of-Limited-Liability-Companies One of the things will be timing as some election options can only be done not more than 75 days before or more than 12 months after election filing. Easy read, just step through the material. Thank you very much. Lucho Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted October 18, 2014 Report Share Posted October 18, 2014 C corporation or S corporation Lucho Which one? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted October 18, 2014 Report Share Posted October 18, 2014 Form an LLC per his state law. Form 8832 to elect corporate taxation. Read the instructions and deadlines. Organizing the LLC is usually easy. Having a good operating agreement if more than one member is the part that needs a lawyer familiar with your state law. What do you do when the members disagree, one wants out, one dies, one wants the other to leave, spouse inherits, one wants to sell, etc.? Those are the things to put in a legal document now while everyone is getting along, before anything goes wrong. 3 Quote Link to comment Share on other sites More sharing options...
Lucho Posted October 19, 2014 Author Report Share Posted October 19, 2014 Form an LLC per his state law. Form 8832 to elect corporate taxation. Read the instructions and deadlines. Organizing the LLC is usually easy. Having a good operating agreement if more than one member is the part that needs a lawyer familiar with your state law. What do you do when the members disagree, one wants out, one dies, one wants the other to leave, spouse inherits, one wants to sell, etc.? Those are the things to put in a legal document now while everyone is getting along, before anything goes wrong. Thank you Lion. I appreciate your post Lucho Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted October 20, 2014 Report Share Posted October 20, 2014 Wish I could "like" Lion's post three or four times. That is so true, and SO important in any partnership or LLC. NO MATTER HOW IT IS TAXED. Taxes are only a small part of the issues that can arise. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted October 20, 2014 Report Share Posted October 20, 2014 WHY would they go through the cost of an llc if they want a corp??? why not just form a corp? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted October 20, 2014 Report Share Posted October 20, 2014 Sometimes, they're already an LLC but getting more profitable and want to be an S-corp to save SE tax or even a C for fringe benefits. The organizational costs to the CT secretary of state as well as the annual reports to her are much cheaper for LLCs than for corps. Or, their barber told them to do it. I tell clients the lawyer organizing or incorporating in CT isn't doing anything they can't do themselves on the SOS website. But, the lawyer can put their operating agreement down on paper for them to sign now and save them larger litigation fees later when a disagreement arises, such as dealing with beneficiaries when a member dies. You might get along great with your other members, but do you want to be in business with their spouses and children? 1 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted October 21, 2014 Report Share Posted October 21, 2014 WHY would they go through the cost of an llc if they want a corp??? why not just form a corp? What you are overlooking is that while it's INCOME will be TAXED as a corp, it is legally an LLC, which has some benefits in areas like estate planning, etc, and may, in some states be taxed more favorably as well. Quote Link to comment Share on other sites More sharing options...
Lee B Posted October 21, 2014 Report Share Posted October 21, 2014 Also, you don't have the requirement of an annual meeting and Board of Director Minutes. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted October 21, 2014 Report Share Posted October 21, 2014 True, although I always encouraged them to put any significant decisions into writing, and have the members sign it. Avoids a lot of future disagreements and protects them all. Quote Link to comment Share on other sites More sharing options...
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