LLCs Owning S Corporations
A single-member LLC can own an S Corp. A single-member LLC taxed as an S Corporation only pays taxes on the owner’s salary. The remaining profits are not taxed. Both single and multi-member LLCs can elect S or C Corporation status if they meet requirements. To qualify as an S Corporation: Be a domestic corporation eligible to be a domestic corporation.
Utilizing Qualified Subchapter S Subsidiaries
Using a single-member LLC or a qualified subchapter S subsidiary (QSub) for an S corporation expansion can help separate assets and liabilities without needing a separate tax return. A QSub is owned by an S corporation and can elect S corp treatment.
Tax Considerations for LLCs and S Corporations
If an LLC has more than one member, it is taxed as a partnership unless it elects to be taxed as a corporation. But if an LLC has only one member and has not elected to be taxed as a corporation, it can own an S-Corp under IRS rules.
Can a single-member LLC operate as an S Corp? Yes, a single-member LLC can be taxed as an S-Corp by filing IRS Form 2553. In fact, both single and multi-member LLCs can elect to be treated by the IRS as either an S Corporation or a C Corporation if they meet the requirements.
The LLC S corp election can be done by filling out a form 2553, which allows a company to be taxed as an S corp. Another benefit is that LLC members don’t have to pay self-employment tax.