Discussion:New Company starting as LLC, then electing S-Corp
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| {{ForumReplyPost|UserID=CrowJD|Date=19 January 2007|Text=Both the tax specialists and the attorneys are being trumped today, heck, the clients just set up their business through the net. For some reason known only to God, they seem to be fascinated by the LLC in all its permutations. In a typical law school, you will get three months of tax, and three months of Corp./Partnership, but they are both electives, and not required. The word accounting is not even mentioned. I have personally spent hours trying to learn partnership accounting on my own dime, books and what not. But let's all keep in mind, no one bothered with partnership accounting for years, the partnership form of business was dead before the MMLLC came out.}} | {{ForumReplyPost|UserID=CrowJD|Date=19 January 2007|Text=Both the tax specialists and the attorneys are being trumped today, heck, the clients just set up their business through the net. For some reason known only to God, they seem to be fascinated by the LLC in all its permutations. In a typical law school, you will get three months of tax, and three months of Corp./Partnership, but they are both electives, and not required. The word accounting is not even mentioned. I have personally spent hours trying to learn partnership accounting on my own dime, books and what not. But let's all keep in mind, no one bothered with partnership accounting for years, the partnership form of business was dead before the MMLLC came out.}} | ||
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| + | {{ForumReplyPost|UserID=DianeOffutt|Date=19 January 2007|Text=Hi CrowJD, | ||
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| + | I have a few clients that did just that and they are now having problems and needing both tax and legal help. I guess they hear the words "Limited Liability" and think the LLC is the right move. They tend to not ask about tax issues until it is too late. I look at it as I am either proactive in their life and advise them on what is most beneficial to them, the client, or reactive and just be there when they need me. | ||
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| + | Diane}} | ||
Revision as of 15:50, 19 January 2007
Discussion Forum Index --> Tax Questions --> New Company starting as LLC, then electing S-Corp
DianeOffutt (talk|edits) said: | 18 January 2007 |
| Hi all,
I have a client, we are applying for an LLC then filing Form 2553 to elect S-Corp status. My question, when we file for LLC, since we know we will elect S-Corp shouldn't we file as CORP and the legal name of the company will be XYZ, Corp. I am not sure if we must start with XYZ, LLC, then AFTER we file Form 2553 we can change the company name to XYZ, Corp. Not sure if I am making too much of this, maybe either way is ok...but thought I would run it by this forum to see if anyone else has had the experience. Thanks for all your help, Diane Offutt Woodstock, Georgia | |
Bottom Line (talk|edits) said: | 18 January 2007 |
| Don't know anything about GA law but an LLC and a Corp are two different types of entities. Don't think you can use the "corp" name for an LLC (but every state is different). The real question is which type of entity is best. | |
DianeOffutt (talk|edits) said: | 18 January 2007 |
| LLC is easier to form and S-Corp status will allow profits free of SE taxation (client will be taking a reasonable salary. I will check the GA law before filing the articles of organization and go from there.
Thanks for replying Bottom Line. Diane Offutt | |
| 18 January 2007 | |
| Hi Dianne, I used to be in Woodstock.
In GA, the name needs to say "LLC" or "Limited Liability Company". You can get the rules at the Secretary of State's website. Kevin | |
| 18 January 2007 | |
| I don't see how it is easier to form vs a CORP / then electing S status. The only difference I see is State Filing Fees may be differnt for each type of entity. | |
| 18 January 2007 | |
| Sometimes the client comes to us after the attorney has already LLC'ed them (they used to incorporate them). In our discussion with the client, we realize they SHOULD be taxed as an S-Corp. The election can save them from the IRS without having to go back to the attorney. | |
DianeOffutt (talk|edits) said: | 18 January 2007 |
| Thanks Kevinh5. Yes, I did go to the SOS website and found exactly what you said. Other than Articles of Organization for an LLC versus Articles of Incorporation and stating shares issued it seems it WOULD have been easier to form the corp THEN the S-corp election. Now when I see LLC instead of thinking either a PARTNERSHIP return form 1065 (more than one member in the LLC) or a Schedule C (single-member LLC) I need to truly see the letter from IRS advising what tax form to use. So far all my clients were either form 1065 or schedule c...so this problem is my first encounter.
Thank you again for all your help Kevinh5. Diane Offutt | |
| 18 January 2007 | |
| Diane - where is your practice? I was on Bells Ferry Rd north of Eagle Drive. | |
DianeOffutt (talk|edits) said: | 18 January 2007 |
| Company name Accounting Connections, LLC, in Towne Lake (The Fairways), home based business since Jan 04. My website is accountingconnections.org.
Do you still have a practice and if so, where? | |
| 18 January 2007 | |
| I'm up in Asheville, NC now. Trying to sell my building on Bells Ferry in front of the new Super(?)WalMart and 1031 into something up here. We still have a home in Marietta - used to live in Sturbridge off Eagle Drive before Towne Lake was started. My website is www.myhdvest.com\blue | |
DianeOffutt (talk|edits) said: | 18 January 2007 |
| I will check out your website. If my business was larger I would look into purchasing a brick and morter office. However it is still managable as a home based business; most of my clients are via remote access or they are located within 10 minutes from me.
Nice to meet you and hope to talk to you more in this forum. Diane | |
DianeOffutt (talk|edits) said: | 18 January 2007 |
Kevin,
I just went to your site and noticed you are an enrolled agent. I am in the MAcc program at Kennesaw State College. I plan on sitting for the EA exam after graduation. It is nice to meet a fellow Georgian. I will keep you and your firm in mind if ever I come across a client in need of your financial services. My firm specializes in QuickBooks and income tax returns. We do not offer financial planning. Take care, Diane | |
| January 18, 2007 | |
| Not to hijack the love-fest..(and hey, I was in Kennesaw last spring!) but my pref would be to definitely form a corp if a corp is what you want. There's just too much uncertainty in all this check the box stuff going on. Since you want a corp, form one. | |
| 18 January 2007 | |
| Not to mention the 100+ years of law backing the corporation in state and federal courts... | |
DianeOffutt (talk|edits) said: | 19 January 2007 |
| I agree, but for some reason my client's attorney seems to think this way is better???? I meet with my client today, so you KNOW I will be discussing this further with him. It just makes more sense to call the company WHAT it really is (in my simplistic approach to issues).
Thanks for all the input. Oh, and JR1 I hope you enjoyed your stay in Kennesaw. Thanks for all the feedback. This is a great forum...informative and friendly. Diane | |
| January 19, 2007 | |
| I happen to like most attorneys. And that said, don't let him drive. The problem is that the attorney doesn't live with the tax issues later and many times doesn't care. He's got the legal structure set and done, and it's over as far as he's concerned. Unless that attorney understands tax law, and many do not, sadly...you're the one who will be living and maintaining whatever he cooks up. He has to understand the consequences or help you understand that there are none. | |
DianeOffutt (talk|edits) said: | 19 January 2007 |
| I agree (and now that I just finished discussing this with my client, he agrees). My client is meeting with his attorney and requesting Articles of Incorporation. I advised my client as soon as I SEE those papers we can file the necessary S-Corp election, Georgia Dept of Labor and Revenue ID numbers. The federal EIN number will be applied for today (now that we are clear on the legal structure).
Thanks again for all the great feedback. Diane | |
| 19 January 2007 | |
| Both the tax specialists and the attorneys are being trumped today, heck, the clients just set up their business through the net. For some reason known only to God, they seem to be fascinated by the LLC in all its permutations. In a typical law school, you will get three months of tax, and three months of Corp./Partnership, but they are both electives, and not required. The word accounting is not even mentioned. I have personally spent hours trying to learn partnership accounting on my own dime, books and what not. But let's all keep in mind, no one bothered with partnership accounting for years, the partnership form of business was dead before the MMLLC came out. | |
DianeOffutt (talk|edits) said: | 19 January 2007 |
| Hi CrowJD,
I have a few clients that did just that and they are now having problems and needing both tax and legal help. I guess they hear the words "Limited Liability" and think the LLC is the right move. They tend to not ask about tax issues until it is too late. I look at it as I am either proactive in their life and advise them on what is most beneficial to them, the client, or reactive and just be there when they need me. Diane | |
