Can I Switch From LLC to S Corp?

Overview

An LLC can choose to be taxed as a sole proprietorship, partnership, S Corporation, or C Corporation. Self-employed individuals can save on taxes by switching to an S Corp.
Tax Election Process

Use Form 8832 for LLCs wanting C-corp, partnership, or sole proprietor tax status. Use Form 2553 for LLCs or corporations wanting S-corp status.
Steps for Conversion
1. Meet IRS eligibility requirements.
2. File Form 2553 with the IRS to elect S corporation status.
3. Amend operating agreement to S corp standards.
4. Get any licenses and permits needed.
5. Notify state, agencies, contractors of the change.
6. Set up S corp payroll.

Succession Planning

An S-Corp offers easier succession planning than an LLC. Consider several factors before switching from an LLC to an S-Corp.
Case for Conversion

Understand when it makes financial sense to convert an LLC to an S-Corp based on income levels. Factors such as tax advantages and liability protections influence the decision.

Tax Benefits

Electing S-corporation status for your LLC can reduce your tax bill without changing its legal structure.
Conversion Deadline

It is essential to convert to an S-Corp by March 15 or within 75 days of opening the LLC to be applicable for the respective tax year.

Eligibility and Process

Single-member LLCs can also convert to an S Corporation by meeting IRS requirements. Seek professional advice before making this tax election.