By Alfred Fricano
In the fourth and final part of this blog series, we’ll explore the benefits of organizing your new business by combining the features of an LLC and an S corporation.
There are certainly benefits of establishing your business as an LLC, but then electing to have it treated as an S corporation by the IRS for tax purposes.
To accomplish this, you'll have to make the special election with the IRS using Form 2553. It's no more difficult than setting up a corporation and then electing S corporation status. But it may have some added benefits, like:
Consider the pros and cons
Obviously, you need to carefully consider the pros and cons of different forms of business organization. Be sure to consider how all the aspects - legal, tax and operational - of each organizational form will impact your unique business enterprise.
Setting up an LLC and then electing treatment as an S corporation may just give you the best of both worlds - the ease of administration of the LLC and the tax planning opportunities of the S corporation.
Seeking professional advice from a CPA or tax attorney is always a wise practice when making choices like this that can affect your business for many years to come.