LLC, Taxed As S-Corp

[lozt]

My question involves business law in the state of: New York

Hi,

When filing for the LLC, I had elected to be taxed personally. How would I be able to change this to be taxed as a S-Corp instead?

Or a better option if able, would I be able to convert the LLC to an S-Corp instead?

[SChinFChin]

My question involves business law in the state of: New York

Hi,

When filing for the LLC, I had elected to be taxed personally. How would I be able to change this to be taxed as a S-Corp instead?

Or a better option if able, would I be able to convert the LLC to an S-Corp instead?

Yes, you can make a change via IRS form 8832, but read this first:

http://www.irs.gov/publications/p340...link1000245860

I'm in NYS, and I have an S Corp for one business, and another under an LLC. Fees for S Corps are lower. I since sold the business under the LLC, but a 2 member LLC's annual fees ran $500, down from $800 a few years back. There is a minimum franchise tax of $50 for the state for S Corps.

Advantage is if it is a one single member LLC, filing as an individual, there you can file with a schedule C under your personal 1040.

However, you would have to re-incorporate if you want to operate as an S Corp instead of an LLC. By for federal tax payment purposes, all you need is change the classification via the 8832.

[lozt]

Thanks for your response.

I made the mistake by filing with one of them "online" agency instead of hiring an accountant.

I got my paper work in the mail yesterday, but I didn't sign the papers yet. Now, im not sure which steps I have to take to re-incorporate.

I'm not sure if im in the system already, or if it's not valid until I sign them.. . or what should I do from here?

[SChinFChin]

>>>

I made the mistake by filing with one of them "online" agency instead of hiring an accountant.

I got my paper work in the mail yesterday, but I didn't sign the papers yet. Now, im not sure which steps I have to take to re-incorporate.

I'm not sure if im in the system already, or if it's not valid until I sign them.. . or what should I do from here?/

>>>>



OK, I see you're just setting it up, and it looks like you are in the system. You can go to the NY State website, enter the entity name to check yourself, to see if it is already active.

http://www.dos.state.ny.us/corps/bus_entity_search.html

I thought you were in business for a while.

You can still bring what you have down to a CPA to make sure you started off right. Based on what you have, you can:

- Still make your initial tax classification selection, with the LLC taxed as an "S Corp", instead of the default of a proprietor for a single member.
- Obtain your EIN number.
- Obtain a DBA if you want to.

But it is still not too late to go for an "S Corp" instead, if that's what you want. But at this point, you would have to terminate the LLC, and set up an S Corp instead.

I suggest you see a CPA right away, someone who can give you some guidance going forward.

[lozt]

Yes, I'm still setting up, but already obtained my EIN and didn't apply for a DBA.

No business entities were found.
Please refine your search criteria.

I guess i'm not in the system yet.

I don't want to spend another $500 for doing this again, so I'm going to see if the 'online' agency can help me out with this. If they brush me off, i'll go directly to a CPA.

Thank you for your time and advice SChin, I greatly appreciate it.

[SChinFChin]

Yes, I'm still setting up, but already obtained my EIN and didn't apply for a DBA.



I guess i'm not in the system yet.

I don't want to spend another $500 for doing this again, so I'm going to see if the 'online' agency can help me out with this. If they brush me off, i'll go directly to a CPA.

Thank you for your time and advice SChin, I greatly appreciate it.

OK, now I don't know if you gone ahead to satisfy the LLC publication requirements, which you'll have to comply with within 120 days of LLC formation. See link:

http://www.newyorksmallbusinesslaw.c...re_of_.html#tp

Some years back, I read the cost to fully comply with the publication requirement can cost you $1,500, though this article mentioned $1,000.00. It depends on advertising rates, and NYC where I am is far more expensive. There are no comparable requirements for C or S Corps, so if you are thinking of dumping the LLC, and forming an S Corp instead, this is another consideration besides the annual LLC fees.

At this point, you may have to dissolve the LLC though.

As for spending $500 "on line" just to do what you do (including the state filing fee of $200.00), I know LLC's may be a little more, but from what I see, other on-lines services charges a lot less, These people below charges $164.00, and from their ad, FREE state filing fees, I used them myself for my C Corp, and I personally picked the paperwork up at their offices:

http://www.amerilawyer.com/index_ny....e=google_corp;

I can vouch I only paid the $164.95, and no more. But from what I see, you might want an opinion from a CPA before you go crazy.

Just to add a friend of mine used a CPA to incorporate, paid over $1,000, and he had to go out and buy the "corporate book", and "corporate seal" separately, and you can see from the above that it is included, so it's another hassle and expense I didn't have to go through. And corporate seals are not cheap.

They even wrote up the initial meeting where the officers are elected, so I was amazed at what came with the price. Remember, unless you ask, most CPA's are not going to write up the minutes of the first meeting, not their job, which is the election of officers, stick it in the corporate book, and then give it to you for free. My friend who paid his CPA over $1,000 didn't even realize he had to write up the meeting, let alone have a meeting electing the officers, when I mentioned it. LOL

Now, each corporate entity has to have a so called "registered agent" here in NY, and I noticed they put themselves down as the agent, so that's probably where they hope to make some money back later on. You can change the agent to someone else if you want.

In the meantime, you can expect to get newletters, and advertising from these people through the years, which I didn't mind getting, and some newsletters were useful.

[Bubba Jimmy]

My question involves business law in the state of: New York

Hi,

When filing for the LLC, I had elected to be taxed personally. How would I be able to change this to be taxed as a S-Corp instead?

This is the question I was answering. You're right, the difference in fees between the two types of entities in NY is abusive. Bizzarre, even.

However, there are many more corporate formalities to maintaining a corporation. A message board is a poor place to fully discuss all the ins and outs of this decision. There are legal questions, tax questions, things relating to personal liability, etc. I hate to just tell someone "go do this", particularly when it involves giving advice that borders on giving legal advice. Really, if someone doesn't have the money to consult a professional and get professional advice, they either need to become very adept and learning what they need to know or else they don't have enough money to go into business.

[lozt]

Thank you both for your responses!

I am going to drop the LLC and refiled for an S Corp.

How much would a CPA normally charge to close an LLC and to file for an S Corp?
I don't want to get ripped off.

[SChinFChin]

Thank you both for your responses!

I am going to drop the LLC and refiled for an S Corp.

How much would a CPA normally charge to close an LLC and to file for an S Corp?
I don't want to get ripped off.

Please read this article link that pertains exactly to your case:

http://www.newyorksmallbusinesslaw.c...g_a_mi.html#tp

This procedure is for cases where you made a mistake forming an entity, in this case an LLC, and you'll need to form a Corp in it's place.

This procedure is used if you did NOTHING with your LLC, and you want to form a corp in it's place. You'll notice the LLC dissolution fee is $60.00, and the Corp formation fee is $135.00, so if you see a CPA, he would at least have to spend $195 in fees on your behalf.

Usually, CPA's in my area charge fees of at least $100/hour or up, and the above does not seem complicated, something you can do yourself. I wouldn't pay more than $200 in professional fees for someone to do this. Add this to the state fees, maybe $400, tops.

I haved formed corp entities, and dissolved some, but I never used the procedure described here as the "1-2 filing", but it does not appear that complicated. The article is from year 2007, so you might double check the current fee schedule on the NYS Department of State WEBsite.

Now, I have dissolved a C Corp myself following the directions on the NYS DOS Website, downloading their forms, and paying the fees online by credit card.

As Bubba pointed out to you, there are formalities after the formation of the Corporate entity, the initial meeting, the election of officers etc., and I'm not sure if most CPA's cover that. The service I cited earlier does all of this in the formation for a total of $164.95, including the book, seal, writing up the initial meeting and election of officers. See link:

http://www.amerilawyer.com/

BTW, on the question of maintaining corporate formalities, the above firm provides a service for doing that as well, for an annual fee, which includes writing up an "annual meeting" for you, keeping a copy at their (your lawyer's) office, and a hot line for answering questions.

You can try calling them and see if they can do a "1-2 filing" mentioned above.

[lozt]

Wonderful, thanks!
No, I had not done anything with the LLC yet.
You had been a great deal of help, thank you so much.