Converting your LLC to an S-Corp when filing your tax return for tax purposes can be a complicated process, but it is possible. You can submit the documents necessary to convert your LLC to an S-Corp for tax purposes along with your tax return.

Why would I want my LLC to be an S corp?

The S corporation is the only business tax status that lets you save on Social Security and Medicare taxes while avoiding double taxation. An LLC taxed as S corp offers benefits of a corporation while also providing flexibility on income treatment.

How do I change from a single member LLC to an S corp?

You can change your limited liability company (LLC) to an S corporation (S corp) by filing Form 2553 with the Internal Revenue Service (IRS)….IRS Form 2553 Instructions

1. Check S Corp Eligibility.
2. Check Form 2553 Due Dates.
3. Complete and File Form 2553.

How much does it cost to change from LLC to S corp?

The converting entity must be a California Corp, LLC or LP; or Registered Foreign Corp, LLC, LP or Other Business Entity; File a Certificate of Conversion (Form CONV-1A); The filing fee is $150 if a California Corp is involved; and $30 for all others.

Do S corps have to pay a salary?

The IRS requires S Corp shareholder-employees to pay themselves a reasonable employee salary, which means at least what other businesses pay for similar services. Basically, the IRS can recharacterize your distributions as salary and require payment of back payroll taxes and penalties.

Can a single-member LLC be an S Corp?

Learn how you can have your single-member LLC be taxed as an S corporation. The default federal tax status for a single-member limited liability company (SMLLC) is disregarded entity. However, the owner of an SMLLC can elect to have the business taxed as either a traditional C corporation or as an S corporation.

Can a single-member LLC own an S Corp?

An S corporation can also be a shareholder, but only when that S corporation is a 100 percent shareholder. A partnership can’t own stock of an S corporation.