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    2 Replies Latest reply on May 18, 2009 7:19 PM by dreams2realty

    llc taxed as an s corp

    nicksain Newbie
      Hi, I just started an single memeber LLC. Im thinking to the future,
      and it seems to me that being elected to taxed as an S corp is the best
      way to reduce the SE tax.

      I just have a few questions about this process:

      1. What are the considerations you have to take while being taxed as an
      s corp -- do you need to go through the legal formalities of
      corporations? My understanding is you do not since you are still
      legally an LLC.

      2. Aside from making myself an employee and paying my self wages from
      the corporation, will I receive money from the corporations income as
      pass through? dividends? Which of these would I avoid paying income /SE
      taxes on?

      3. Do you have to make any special consideratons to keep money in the
      LLC's account and not have it pass through to you to keep it aside for
      future planned expenses, emergencies, taxes for the next year, etc?

      Thanks for your help in advance in helping me understand this. I know I
      need to consult an accountant but before I do I want to try and
      understand as much as I can .
        • Re: llc taxed as an s corp
          eZeeTax Wayfarer
          There is a very interesting discussion going on between two members on an accounting forum and I think you ought to take a look:

          • Re: llc taxed as an s corp
            dreams2realty Newbie
            Hello NickSain

            It depends on what is happening in your Business, say you work with lot of vendors and you get all the revenue but you have to pay away all these sub contractors or vendors in that case you dont want yourself to be taxed on the total revenue you are brining in. Best thing would be toget taxed only on the NET revenue you are making.

            To be considered an S corp for taxation purposes you have to send a written request to IRS asking that you are doing a reelction to be considered as an S corp for taxation purposes so that even though you are registered as an S corp. IRS will tax you as an S corporation.

            When I wanted to do it out 3 Accountants 2 didnt know what I a was talking about. Find an Accountant who is knowledgeble about Corporate taxation laws and Fire the old one.