Hi Mike:1 of 1 people found this helpful
No, you can't back track. You have to wait until you file. There's no approval necessary but you can only be an S-Corp. starting on the day you file. Also, note that an LLC and an S-Corp. are two different business forms. You can't be both at the same time for the same business. You can see a comparison chart here: http://pagebuzz.com/businessstructuretypes.html. I would recommend using the LLC. You will have similar benefits with less paperwork.
You can be both a LLC and an S corp.
LLC is a legal structure - not a tax classification. It is not recognized by the IRS hence they reclassify you as another entity unless you make the proper elections.
In your acse, you would file forms 8832 and 2553.
8832 is to elect to be classifed as a corporation
2553 is the S copr. election.
You are now a legal LLC withe the tax classification of an S corp.
Best if luck,
I had formed an LLC with a partner in 2004 as a marketing company. In December 2008 I became the sole owner of the LLC. I filed 100% taxes as an LLC in 2009 and 2010.
I want to go into government contracting, but am not sure if I should convert to an s-corp now or wait till I get a contract.
Does anyone know if it's better to be an LLC or an s-corp in the government contracting world?
Thanks for the feedback.
Greg, I was pretty sure that I could go the route that you described, I was hoping that I could file for 2009 as an S-corp for tax reasons. It looks like I will have to report all my companies profit as my personal earnings.
One more question. Can I pay myself the mileage for the year in a check to myself? or, do I have to deduct it from my personal taxes?
Mileage is deductible but you must keep good records. If your business leases the car (versus a personal lease) it is deductible.1 of 1 people found this helpful
The advantage of an S corp is you can have pass through income.
Let's say your business makes a profit of $50,000. You might elect to pay yourself a salary of $25,000 and have the rest "pass through" as income of $25,000. This wasy, you are only paying payroll taxes on the $25 of wages. The other $25 is treated as ordinary income.
Please mark answers as "Helpful" if they were.1 of 1 people found this helpful
I provide consulting services for a set hourly rate.
I am currently a "sole proprietor" I have a separate business account (BoA) for all business income, ect. All financials go into this account.
All checks are paid to my business.
I am the only employee. I do not plan on having employees in the future.
So far I have invoiced approx. $100K in labor charges for the year. I have taken cash draws of $35K so far. I have not paid any taxes so far. Because I have very few expenses, I plan on doing the books on myself. t just bought Quickbooks Pro 2010 to manage my business.
I would like apply for a LLC with the state of washington, and then file IRS form 2553 to classify my business as a S-Corp.
The question is this, will the IRS let me classify my business as a S-Corp for 2009? or will it only become effective after it get approved?