partnership switching to s corp

[WITAXLADY]

LLC being treated as partnership filing 1065 wants to be S corp now... under same LLC

Do we just file 1120S with same EIN? Same entity, same members - WI

[michaelmars]

i hope they got good advise on doing this. sort of defeats the purpose and cost of getting an llc in the first place.

[HV Ken]

WITAXLADY - I would think they still need to make the election on the 2553. The IRS is not going to recognize them as an S-Corp without this. It certainly will not e-file.

Michael - we have seen many clients start small as LLC and then elect to S-Corp as their business grows. I think this can be a smart path and don't understand how this defeats the purpose of getting the LLC initially. Care to elaborate?

[michaelmars]

SURE, an llc avoids the issue of payroll for the owners, is very easy to transfer shares around for estate planning etc. Special rules for S corp trusts but an llc can be put into trust for their kids. If real estate, refi distributions aren't limited by basis. and here is the big one. LLC protects you from your partners actions. an S corp doesn't.

[HV Ken]

Michael - you and I should have a conversation after 4/15 to continue this discussion!!!

[michaelmars]

SURE, YOUR PLACE OR MINE, I STOCK SINGLE MALTS WHAT ABOUT YOU?

[HV Ken]

Uh - water bottles!!! We can meet for a meal on City Island. Fantastic seafood restaurant there.

[WITAXLADY]

thank you - depends on what and why you are forming the LLC - real estate, liability, S corp when income grows down the road.

this case was husband wife as members and then mama papa got involved when they provided much dinero! and wanted to be in on it but not just as banker. Not husband is working and wants a paycheck ie S corp...

Definitely do the election and that should take care of the EIN.... ? I hope - if not, we will find out!