Yes, a S company can own an LLC that is taxed as a S corporation, is the quick response to this issue. However, it’s critical to comprehend how these two entities differ from one another in terms of taxation.
A corporation that has chosen to be taxed under Subchapter S of the Internal Revenue Code is known as a S corporation. This indicates that the business does not personally pay federal income taxes. Instead, the shareholders receive a pass-through of the gains and losses, which they then record on their personal tax returns.
A limited liability company (LLC), on the other hand, is a flexible business form that combines the tax advantages of a partnership with the liability protection of a corporation. LLCs can be taxed as a partnership, C corporation, S corporation, or a sole proprietorship.
For taxation purposes, an LLC that is owned by a S corporation and is taxed as a S corp is viewed as a disregarded entity. Federal income taxes won’t be paid by the LLC directly since they will be passed through to the S company, which will then pass them on to the shareholders.
A tiny business with a few stockholders that wants to prevent double taxes is an example of a S corporation. The company can pass down its profits and losses to its shareholders and avoid paying corporate-level federal income taxes by choosing to be taxed as a S corp.
A one-member LLC is not always a S corporation or a C corporation. A single member LLC is treated as a sole proprietorship by default, but if it satisfies the conditions, it can choose to be taxed as either a S corp or a C corp.
The Georgia state income tax filing date is April 15th, the same day as the federal due. Georgia does, however, provide a standard six-month extension for submitting state income tax forms. You will have until October 15th to file your state income tax return if you request an extension by April 15th.
In conclusion, a disregarded entity for tax purposes is an LLC that is owned by a S corporation and is taxed as a S corporation. Georgia does provide an automatic six-month extension for filing state income tax returns, but it does not follow that a single member LLC is automatically a S corp or a C corp. To make the best choices for your company, it is crucial to comprehend the variations between these entities and how they are taxed.