The Internal Revenue Service (IRS) automatically regards a single member limited liability company (LLC) as a disregarded entity. In other words, the business owner declares the income and spending of the company on their personal tax return. A single member LLC, on the other hand, has the option to elect to be taxed as a S corporation, allowing the owner to pay less in self-employment taxes. The steps for choosing S corp status for a single member LLC are provided here.
The single member LLC must submit Form 2553 to the IRS in order to elect S corp status. By submitting this form, the LLC notifies the IRS that it wishes to be taxed as a S corporation. Within two months and fifteen days of the start of the tax year in which S corp status is to take effect, the LLC must submit Form 2553. The form can also be submitted by the LLC at any time prior to the tax year in which the election is to take effect.
The owner of the LLC and all other shareholders, if any, must sign Form 2553. The form can be mailed to the IRS at the address provided in the instructions, or it can be submitted electronically using the IRS’s online system. A copy of the form should be retained by the LLC for their records.
The LLC must transmit Form 2553 to the IRS at the address given in the instructions in order to answer the pertinent questions. Form 8832, which is used to modify an LLC’s classification for federal tax purposes, is not required to be filed by the LLC. However, the LLC must wait 60 months before filing Form 2553 if it has already submitted Form 8832 and seeks to alter its legal status to a S corporation.
Finally, original signatures are required on Form 2553. The ink signatures on the form must be those of the LLC owner and each shareholder. The form should be mailed to the IRS together with any supporting documents and any required attachments, such as the LLC’s tax return.
In conclusion, a single member LLC may find it advantageous to choose S corp status. The LLC owner may be able to avoid paying self-employment taxes and gain other tax advantages by following the above-mentioned processes and submitting Form 2553 to the IRS. Before making this choice, the LLC owner is advised to speak with a tax expert.
You must submit Form 2553 to the IRS in order to elect S Corp status for your single-member LLC. The following address should be used if you need to mail Form CT-6 to the state of Connecticut: Department of Revenue Services, State of Connecticut, Hartford, CT 06104-2937, PO Box 2937 Before completing any forms, be careful to check the precise filing guidelines and specifications for your state.