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    3 Replies Latest reply on Jan 9, 2010 4:18 PM by rjc2324

    LLC to S-Corp

    aka_tony Newbie
      I have an single member LLC with no employees (yet) in VA, as a sub-contractor doing C2C, 1099 work. For several reasons I need to get a W2 for myself this year. My income is just pass through right now reported on 1040 Schedule C. My options are to file the correct forms and just elect S-Corp status with the IRS and remain an LLC or completely convert the LLC to an S-Corp. My question is, if I keep the LLC and elect S-Corp status with the IRS, am I allowed to pay myself as an employee, including doing taxes, etc on payroll and generate the W2 at the end of the year, even though I am the single LLC member? My understanding is that members of an LLC are not allowed to be employees or on the payroll of the LLC, hence no W2.
        • Re: LLC to S-Corp
          gpoehlman Newbie
          Hi Tony, take a look at this web site. Maybe it will help. -Grant Poehlman

           

          http://www.bizfilings.com/Learn_About/LLCs_vs_S_Corporations
          • Re: LLC to S-Corp
            LUCKIEST Guide
            LLC to S-Corp

            Tony, Every body in business should have an accountant, a lawyer and an insurance agent.
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            • Re: LLC to S-Corp
              Adventurer
              Hi Tony,

              I think you are confused about what "S" status means. The LLc is a state recognized entity only. In your case the default treatment with the IRS is to treat the LLC as a sole propreitor and file on Schedule C. This subjects your entire profit to self-employement tax and does not provide you with an option for giving yourself a salary to issue a W-2. An S election treats the entity electing S-status (corporation, partnership, LLC, etc.) to file as a subchapter S corporation. This allows you to pay a salary to yourself as an employee and you will then get a K-1 for the balance of the profit which will not be subjected to self-employement tax. This is an oversimplification but the just of what you are asking. If you would like to know more please feel free to contact me.