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Filing LLC tax under corporate taxation status can be accomplished by filing form 8832 with the IRS. There are certain advantages in doing this as your company earnings grow, since on the most basic levels, taxation can be significantly higher depending on the amount of income earned.
Who Can Elect This Status
Any type of LLC can elect to be taxed on a corporate tax status including single member LLC’s and multi-member LLC’s. To accomplish this, you would file the aforementioned form 8832 with the IRS and then file the appropriate forms for your company which would either be 1120 or 1120S, as the case may be.
The primary advantage of doing so would be to avoid double taxation as in the C Corporation, and to lower your tax liability, as in the partnership or sole proprietorship. It is however, up to the IRS to decide if they will allow you to do this or not. Use the following guidelines to elect to file taxes under corporate status:
Step 1 – Complete Form 8832
This is required by the IRS if you wish to be taxed on a corporate status. The form must be completed and submitted prior to, or at the same time that you are filing your LLC tax.
Step 2 – All Members Must Sign
If there is more than one member of the company (most states allow one member LLC’s), then every member must sign the form stating that they agree to be taxed as a corporation.
Step 3 – Submit the Form to the IRS
Once you have completed the form, you must submit it to the IRS. Otherwise, the default rules apply, which means a single member LLC is taxed as a sole proprietor and multi-member LLC’s are taxed as partnerships.
Step 4 – When to File
An election to be taxed on a corporate status cannot become effective more than 75 days before the date the election is filed nor can it become effective more than 12 months after initial filing.
It’s best not to go into such an endeavor without first thoroughly researching the entire process and implications. Always use your due diligence, and consult with a competent professional before filing any such election to be sure the move you make is the right one for your company. It could literally end up costing you more money in the long run
Who Can Elect This Status
Any type of LLC can elect to be taxed on a corporate tax status including single member LLC’s and multi-member LLC’s. To accomplish this, you would file the aforementioned form 8832 with the IRS and then file the appropriate forms for your company which would either be 1120 or 1120S, as the case may be.
The primary advantage of doing so would be to avoid double taxation as in the C Corporation, and to lower your tax liability, as in the partnership or sole proprietorship. It is however, up to the IRS to decide if they will allow you to do this or not. Use the following guidelines to elect to file taxes under corporate status:
Step 1 – Complete Form 8832
This is required by the IRS if you wish to be taxed on a corporate status. The form must be completed and submitted prior to, or at the same time that you are filing your LLC tax.
Step 2 – All Members Must Sign
If there is more than one member of the company (most states allow one member LLC’s), then every member must sign the form stating that they agree to be taxed as a corporation.
Step 3 – Submit the Form to the IRS
Once you have completed the form, you must submit it to the IRS. Otherwise, the default rules apply, which means a single member LLC is taxed as a sole proprietor and multi-member LLC’s are taxed as partnerships.
Step 4 – When to File
An election to be taxed on a corporate status cannot become effective more than 75 days before the date the election is filed nor can it become effective more than 12 months after initial filing.
It’s best not to go into such an endeavor without first thoroughly researching the entire process and implications. Always use your due diligence, and consult with a competent professional before filing any such election to be sure the move you make is the right one for your company. It could literally end up costing you more money in the long run
