Tax guides
Business structure under US federal and state rules.
Forming a single-member LLC usually does not change a sole proprietor's federal income tax. Moving a business into a corporation may also avoid immediate gain, but cash received, insufficient ownership control, or debt above the assets' tax basis can make it taxable. Converting a C corporation to a pass-through LLC can create tax at both the corporation and shareholder levels.
Self-employed · Partnerships · Corporations
First check the IRS's recorded effective date. If a timely Form 8832 went missing, submit filing proof. If the intended date is beyond the ordinary 75 days window, eligible LLCs request relief on Form 8832 under Revenue Procedure 2009-41 within 3 years and 75 days of that date, with reasonable cause and consistent returns. Until corporate status applies, the owner or partners report income.
Self-employed · Partnerships · Corporations
Confirm the IRS's recorded effective date; a lost CP261 does not cancel an accepted election. A late Form 2553 may qualify for Rev. Proc. 2013-30 relief, usually within 3 years and 75 days, if the business was eligible, had reasonable cause, corrected the error diligently, and reported consistently. Missing consents or ineligible owners need separate review.
Self-employed · Partnerships · Corporations
A default LLC passes profit and potentially usable losses to its owners, even if they leave cash in the business. That can matter when owners need distributions or can use early losses. A C corporation pays its own tax and may suit a planned qualifying stock sale, but dividends add owner tax. Compare state costs and annual cash needs before forming.
Self-employed · Partnerships · Corporations
If you alone own both a rental or home and a disregarded single-member LLC, deeding the property to the LLC generally leaves your federal income tax reporting unchanged. Adding owners can require a partnership return. A change in ownership, mortgage debt, state property or transfer tax, and annual LLC charges can change the result.
Individuals · Partnerships
First map legal and federal ownership, S eligibility and state filings. A DBA adds no taxpayer or return. One-owner LLCs usually report through owners; multi-owner LLCs usually file Form 1065. Corporations file Form 1120 or 1120-S. Holding LLCs follow their classification. Sole proprietors, partners and S shareholders pay tax on their shares; C corporations pay their own tax.
Self-employed · Partnerships · Corporations
An S corporation election can pay off when profit is well above a reasonable owner salary, since distributions beyond it carry no employment taxes. Payroll, a yearly Form 1120-S and any state tax cut into the saving. An eligible corporation or LLC elects on Form 2553, signed by all shareholders, by 2 months and 15 days into its tax year.
Self-employed · Partnerships · Corporations
A domestic LLC owned by two spouses or other family members generally files Form 1065 unless taxed as a corporation. Spouses who own a qualifying LLC entirely as community property may report it as a disregarded entity on the applicable owner schedule. Separate returns can still require community-income allocation. An LLC cannot elect qualified joint venture status.
Individuals · Self-employed · Partnerships
An eligible calendar-year C corporation can elect S status for January 1 by filing Form 2553 by March 15 (or the next business day). The switch usually triggers no immediate tax. Later, old C earnings can fund dividends after S-year income, and pre-switch asset gains can face corporate tax. Model these costs before electing.
Corporations
Not sure which rules apply?