An S corporation is also known as an S subchapter. In some instances, a business may be both an LLC and an S-corporation. (You can form an LLC and choose to be taxed as an S corporation, but your business can also operate under the default taxation system for LLCs.)

When can an LLC file as an S Corp?

In the same way, as a corporation elects corporation tax status, an LLC may elect S corporation tax status by filing IRS Form 2553 with the IRS. The election must be made no more than two months and 15 days after the beginning of the tax year when the election is to go into effect.

How does a LLC become a S corporation?

The two processes are different: To elect Corporation status, the LLC must file IRS Form 8832 – Entity Classification Election. An S corporation is a type of corporation, not a separate type of business. A business that is already a corporation files Form 2553 to elect to be an S corporation.

When do you elect to be a S corporation?

The election must be made no more than two months and 15 days after the beginning of the tax year when the election is to go into effect. This article on how a corporation elects S corporation status will give you more details. The other tax option for your LLC is to elect to be taxed as an S corporation.

How are taxes reported on a S corporation?

In an S Corporation, the taxes flow through it to the individuals who own it and the income or losses are reported on their tax forms. The taxes are reported in the same way that a partnership does. On the tax Form 1120S, the details of the business’s finances are reported, including:

How much does it cost to set up a S corporation?

The fees to establish an S corporation can vary significantly, depending on the complexity of the corporation and state in which it’s established, but some of the fees can include: Fees for the articles of incorporation, which might be $100 to $250, depending on the state