Can an LLC Become an S Corp?

LLC to S Corp Conversion

An LLC can elect to be taxed as an S corp by filing IRS Form 2553. Newly formed LLCs must file this form within 2 months and 15 days from the start of their first tax year. Existing LLCs can file Form 2553 anytime.

There are pros and cons to an LLC vs S corp. If you’re self-employed, an S corp can save money on self-employment tax. However, S corps have higher corporate taxes. S corps can also attract investors more easily but have more paperwork.

The process to convert an LLC to an S corp varies by state. For example, in California you file new articles of incorporation with a conversion statement. In Virginia, you file a different form and pay a fee. Consult with a tax professional on your state’s specific regulations.

Steps to Elect S Corp Taxation

  • Figure out if the LLC qualifies for S corp status based on ownership structure, number of shareholders, etc.
  • File articles of incorporation in your state to become an S corp
  • Submit the completed Form 2553 to the IRS

Weigh the pros and cons of an LLC vs S corp carefully as the decision affects taxation and management structure. Converting from an LLC to an S corp requires filing with your state agency and the IRS. It can provide tax savings but also comes with more compliance work. Discuss your specific situation with a tax or legal advisor before deciding.

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