Which Form to File: 8832 or 2553?

The decision between Form 8832 and Form 2553 may have presented itself to you as a business owner. These two forms both serve the same function, which is to modify an entity’s tax categorization. They are utilized in many contexts, though. We’ll go through the distinctions between these two kinds in this article so you can choose wisely.

Business owners who desire to modify their entity’s tax categorization utilize Form 8832, also known as the Entity categorization Election form. LLCs and corporations who desire to change from their default tax categorization to another often use this form. For instance, an LLC that is treated as a partnership may elect to be taxed as a S Corporation or a C Corporation by submitting Form 8832.

On the other hand, businesses that want to be taxed as S Corporations use Form 2553, commonly known as the Election by a Small Business Corporation form. This form is different from Form 8832 in that it can only be used by organizations that meet particular requirements, like having no more than 100 shareholders and just one type of stock, among others.

Which form should you submit, then? You must submit Form 8832 if you are an LLC or company that wishes to switch from being taxed as a S company to another type of entity. However, you must submit Form 2553 if you are a corporation and wish to be taxed as a S Corporation.

An LLC may indeed own another LLC. It’s known as a subsidiary LLC. The subsidiary LLC can have its own tax filing status and business activities because it is a distinct legal entity from the parent LLC. Owning a subsidiary LLC can, however, have tax and legal repercussions, therefore it is best to get professional advice before making this choice.

No, Form 8832 is not required to be filed by a single-member LLC. A single-member LLC is taxed by default as a disregarded entity, which means that the owner’s personal tax return must include the business’s income and costs. The single-member LLC may, however, decide to be taxed as a corporation or a S Corporation by filing Form 8832.

An IRS letter known as a CP 575 form verifies an organization’s Employer Identification Number (EIN). Following its EIN application, the business entity receives this form. The CP 575 form asks for details including the name of the company, the EIN, and the date the EIN was assigned. This form needs to be kept in a secure location since it might be needed for specific business transactions and filings. If I Own a S Corp, Am I Considered Self-Employed? No, if you own a S Corporation, you are not regarded as self-employed. You are regarded as an employee of the company and are entitled to a fair wage as a S Corporation owner. While any earnings transferred to you as a shareholder are exempt from self-employment taxes, the salary you get is subject to payroll taxes. In order to ensure that you are in conformity with tax rules, it is crucial to classify your income correctly and seek professional advice.