How to file the LLC as an S Corporation?
Yes, an LLC (Limited Liability Company) can elect S-Corporation tax status to file taxes. LLC is considered a most attractive and protective structure to conduct business universally. But here our discussion is limited to United States.
Many folks want to form an LLC and the same time have a question how can they avoid funding to self-employment taxes and pull out officers salaries with LLC (Limited Liability Company) structure?
Tax Treatment of LLC as an S-Corporation:
- S corporation election must be filed to get approval from the agencies.
- If an LLC elects to file taxes as an s-corporation then the profit or loss will be passed through to 1120-S. Same as an S-Corporation.
- Owners-officers of an S corp. who perform services for the S corp. shall be considered employees of the S corp. Therefore, they can take the payroll out from the S-Corporation.
- Owners-Officers of an S corp. would take funds out of the S corp. thru shareholder distribution (of profit) and a salary for his or her work performed as an employee of the S corp.
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