Small firms frequently choose S corporations (S corps) because they provide all of a corporation’s advantages without the double taxation. S corps must, however, abide by a number of IRS rules and regulations, just like any other type of business entity. One of these regulations is to timely submit the needed paperwork and make the necessary tax payments. So what happens if your S corp filing is late?
For every full or partial month the return is late (up to a maximum of 12 months), there is a $195 fine. For instance, a $195 penalty is due if your S corp return is submitted 10 days after the due date. A $585 penalty is due if your return is filed 30 days late ($195 multiplied by 3 months). The maximum fine for submitting a S corp return after the deadline is the lesser of $1,950 or $195 times how many months the return is late. This fine is in addition to any interest or further fines that might be imposed.
Therefore, is there a way to verify with the IRS online to determine if an LLC has been elected as a S corp? Yes, you can use the “Check EIN Status” feature on the IRS website to check the status of your LLC’s S corp election. You can check the status of your S corp election by entering the employment identification number (EIN) for your LLC.
Do I submit Form 8832 or Form 2553? To modify an LLC’s tax categorization, utilize Form 8832, Entity categorization Election. If you want to convert your LLC from a partnership or sole proprietorship to a corporation or S corp, you must utilize this form. Your company or LLC might choose S corp status by completing Form 2553, Election by a Small Business company. Within two months and fifteen days of the start of the tax year in which you desire to elect S corp status, you must submit this form.
Another common query is whether a single-member LLC needs to submit Form 8832. No, for tax reasons a single-member LLC is automatically categorized as a disregarded entity. This means that the LLC does not need to file Form 8832 unless it wants to be taxed as a corporation or S corp. Instead, the LLC’s revenue and spending are recorded on the owner’s personal tax return.
What distinguishes form 8832 from form 2553? While Form 2553 is used to elect S corp status for a corporation or LLC, Form 8832 is used to change an entity’s tax classification from one kind to another. While Form 2553 is solely used to elect S corp status, Form 8832 is utilized to change tax classification. Form 2553 must be submitted within 2 months and 15 days of the start of the tax year in which you seek to elect S corp status, although Form 8832 can be submitted at any time.