Tax reform may have you thinking of changing your S corporation to a C corporation, partnership, or sole proprietorship.
With such a switch, you need to consider:
If you want to turn your S corporation into a C corporation, you file an S corporation election revocation statement with the IRS. Your corporation is then a C corporation for federal tax purposes.
If you don’t want your business to be either an S or a C corporation, you liquidate the S corporation and contribute the assets to a new business entity.
If you chose S corporation taxation for your limited liability company (LLC), changing that election is a little more complicated.
First, you must file the S corporation election revocation statement with the IRS. The tax law then treats your LLC as a C corporation for federal tax purposes.
If that’s what you want, stop there.
If you want a disregarded entity (single-member LLC) or a partnership (multi-member LLC), you also need to file with the IRS to also revoke the C corporation election.
If you will like to know if you are in the right entity setup for tax purposes, let us do the work for you. We will provide you with a comprehensive report filled with side by side comparisons of each entity and a snippet of any section 199A deduction you may qualify for. Click the button below to schedule your appointment today.
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Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.