If you run a company in the US as a Limited Liability Company (LLC), you may be asking if you can change to a S Corporation (S Corp) and what the procedure requires. The good news is that switching from an LLC to a S Corp is possible, but it requires significant thought and preparation.
Tax savings are a major factor in business owners’ transition to a S Corp. All of your business income is subject to self-employment taxes if you operate an LLC. However, as the owner of a S Corp, you are able to pay yourself a salary and distribute the remaining profits in the form of dividends that are not taxed as self-employment income. For business owners, this may mean huge tax savings.
You must submit Form 2553 to the Internal Revenue Service (IRS) if you want to change from an LLC to a S Corp. You must submit this form no later than two months and fifteen days following the beginning of the tax year in which you want the election to take effect if you want your LLC to be taxed as a S Corp. You must also fulfill a number of prerequisites, such as holding only one class of shares and having less than 100 shareholders.
You might be asking if you need to publish your LLC if you run an LLC in New York. Yes, it is the answer. In New York, a notice of organization must be published in two newspapers for a period of six weeks. All LLCs must comply with this rule, whether or not they generate any revenue.
You must first submit your articles of organization to the Department of State in order to fulfill the New York publishing requirement for an LLC. Your LLC must publish a notice of incorporation in two newspapers chosen by the county clerk where it is located within 120 days of the creation date. You must submit an affidavit of publication to the Department of State following publication.
And finally, you might be curious about whether your LLC in New York needs to be renewed annually. Yes, it is the answer. Every two years, New York requires all LLCs to submit a Biennial Statement. The statement includes the name, address, and names and addresses of the members and management of your LLC, as well as some basic company information.
In conclusion, switching from an LLC to a S Corp is possible but requires significant thought and planning. Additionally, you need to satisfy certain eligibility requirements and submit Form 2553 to the IRS. Regardless of whether your LLC generates any revenue or not, you must publish your LLC and submit a Biennial Statement every two years in New York.