New LLC

[grandmabee]

I have a new 2 person business who filed for a  state LLC.  When apply for a FEIN it was of course listed as a partnership.  We want to elect for a S-Corp.  I will file the 8832 but do I also have to do the 2553?  TIA

[Bart]

You only need to file the 2553.

[michaelmars]

Can someone tell me why do people create a LLC then elect S corp when they can just create a corp to start?  Also what are the advantages of an S corp?  I know some people like to avoid fica tax with distributions but by you also have to now have quarterly payroll taxes, workers comp and DBL insurance etc.

[BulldogTom]

4 hours ago, michaelmars said:

Can someone tell me why do people create a LLC then elect S corp when they can just create a corp to start?  Also what are the advantages of an S corp?  I know some people like to avoid fica tax with distributions but by you also have to now have quarterly payroll taxes, workers comp and DBL insurance etc.

Not to make light of your question, but choice of entity and elections and state LLC laws is a full week of CPE.   You asked a big question with a lot of different possible answers. 

Depending on where you live, LLC formation can be much more simple than Corporate formation.  Compliance can be less strenuous for an LLC than a Corp.

S corp advantages versus disadvantages is individual choice based on individual circumstances and financial goals.  You still need to run payroll for S or C if you are an employee of the company.   All the PR stuff happens unless you form a partnership and have no employees outside of the partners.  Businesses with ongoing revolving credit lines will make different choices.   The number of current and future owners is a consideration.   There are just too many possible outcomes to make a simple statement like "you need to be an S corp because....".

Tom
Longview, TX

[michaelmars]

We are forming at least 10 entities a week here and I would say 90% are LLC's taxed as partnerships.  This is for real estate and investment ventures.  Some retail or wholesale businesses will go with an S corp.    Yes they cost more to set up in NY but a year or two of paying us to prepare payroll taxes negates that. 

[BulldogTom]

On 11/4/2022 at 3:51 PM, michaelmars said:

We are forming at least 10 entities a week here and I would say 90% are LLC's taxed as partnerships.  This is for real estate and investment ventures.  

That makes a lot of sense to me.

Tom
Longview, TX

[WITAXLADY]

Ours are the reverse - but 10 a year and S corps as trade or business...

Not happy with the new K-3 offer!! Explaining Why THEY DO NOT WANT A -0- k-3 WITH TONS OF PAGES OF INSTRUCTIONS - oops - maybe a falt $750 fee

as none of them have foreign income and now having to do an Operating Agreement - as most are single shareholders.

D