Consider turning your Minnesota LLC into a S Corporation if you currently have one. This can secure your personal assets and offer tax advantages. Here are the steps to change your Minnesota LLC into a S Corp.
1. Submit a S Corp Election form to the IRS Making a S Corp election with the IRS is the first step. Form 2553, which must be submitted within 75 days of the commencement of the tax year or within 75 days of the establishment of the LLC, is the name of this document. A duplicate of the form must be included with your Minnesota tax return as well.
2. submit a S Corp election petition to Minnesota
You must file for a S Corp election with the state of Minnesota after filing with the IRS. Form ST16, which is available on the Minnesota Department of Revenue website, can be used to accomplish this. Within 60 days of the commencement of the tax year or within 60 days of the establishment of the LLC, the form must be submitted.
3. Refresh Your Operating Agreement The operating agreement for your LLC must be updated to reflect the changes after the required filings have been made. This might entail alterations to the hierarchy of management, voting privileges, and revenue sharing.
4. Update Your Tax ID Number and Business Licenses
After changing your business structure to a S Corp, you must update your tax ID number as well as any required business licenses. This can be accomplished by getting in touch with the relevant state agencies and giving them the required data. Minnesota Business Closing Procedures
There are various actions you must follow if you need to close your business in Minnesota. The fundamental steps for terminating an LLC in Minnesota are listed below. 1. Submit Articles of Termination to the Secretary of State
You must submit Articles of Termination to the Minnesota Secretary of State in order to formally dissolve your LLC. There is a $35 cost for this, which can be paid online or by mail.
2. Submit Final Tax Returns to the IRS and the State of Minnesota
You must submit Final Tax Returns to the IRS and the State of Minnesota. This covers all applicable taxes, such as payroll taxes, state and federal income taxes.
3. Cancel Business Licenses and permissions
Any business licenses and permissions that you have secured for your LLC must be cancelled. This can be accomplished by getting in touch with the relevant state agencies and giving them the required data.
4. Notify Customers and Creditors
It’s crucial to let your customers and creditors know that your firm is closing. This can be accomplished by distributing a letter or email outlining the circumstance and include contact information in case any queries arise.
What Your Taxes Will Look Like If You Own an LLC
Having an LLC can have a number of tax repercussions. Having an LLC can have the following effects on your taxes.
1. Pass-Through Taxation
LLCs are frequently taxed as pass-through entities, meaning that the business’s gains and losses are transferred to the owners’ individual tax returns. The owners may pay less tax as a result of this.
2. Self-Employment Taxes
You could have to pay self-employment taxes if you are an LLC member and actively participate in the business. This includes taxes on Social Security and Medicare, which in a conventional employment relationship are normally borne equally by the employer and the employee.
3. Credits and Deductions You can qualify as a business owner for certain credits and deductions that might lower your tax obligation. Deductions for business costs like office space, tools, and supplies may be one of them.
When ought an LLC to file taxes? Even if they don’t owe any taxes, LLCs must file taxes yearly. The deadline for state taxes in Minnesota is normally the same as the deadline for federal taxes, which is April 15th. However, the deadline can change based on your company’s unique circumstances.
The federal tax deadline is March 15th if your LLC chose to be taxed as a S Corporation. If you want to make sure that your taxes are being filed accurately and on time, you should speak with a tax expert.
Limited liability company and limited liability partnership are two business structure options that provide owners with some protection from personal liability. An LLP is made for professional partnerships, such law companies or accounting firms, whereas an LLC can be used for any kind of business. This is the major distinction between the two. An LLP differs from an LLC in terms of its management structure and tax structure.