Determining if You Should Convert Your LLC Over to a S Corporation

Determining if You Should Convert Your LLC Over to a S Corporation

One of our past inquiries to our web site was regarding entity selection issues and their judicious application. Below is the inquiry we received:

I am starting a new Georgia S Corp (changing from a Georgia LLC) and need to gain a business bank acct and make sure many of my forms are filled out correctly. Also need to find an accounting way to invoice clients. Also, will need to file for sales tax collection as we are soon to have retail sales. Feel free to call me any time.

Though many taxpayers come prepared with their own answer for me to supply them, it is necessary for the CPA to be a quick study and to address their individual needs both accurately and succinctly. To this end I prepared the below response:

There is perhaps no larger area of confusion in tax law nor one, which will dramatically affect your total tax bill as tax entities are taxed in several different ways. Understanding these nuances is next to impossible, absent the technical training and experience necessary. To help unravel this mystery we work with taxpayers by providing information that is both insightful and useful.
At http://www.hiscpa.com/article2.html  you will find a narrative that will do much to enlighten you as to the many variables affecting entity selection for your Georgia based business. In this article you will find many of the rules and regulations regarding entity selection in a straight-forward style which is easy to both digest and understand. Also at http://www.hiscpa.com/article6.html you can find an actual example of how entities are taxes and the nuances thereof. We have found over the years that having a sample or illustration does much to remove the mystery of entity taxation issues.
Generally both S Corporations and LLC's will pay the same federal and state income tax. However the nuances exist in the area of payroll taxes and self-employment taxes and the filing of the actual year-end tax returns for each entity. If you quality to be an S Corporation, your LLC can legally convert to an S Corporation for tax purposes, while your LLC would remain such for legal purposes. Often LLC's who transact such an election may save thousands annually in unnecessary taxes being paid . To learn more visit http://www.hiscpa.com/blog/2008/10/02/flow-through-entities-s-corporations-vs-llcs/

We are committed to living out the "Golden Rule" of treating our clients as our friends and giving the best service possible. Our goal of Serving Him as We Serve You, will help you receive the very best advice we can provide. I would welcome meeting to get started and I have time openings later this week and please note: our initial thirty minute consultation is free.

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/  and for his latest book Overcoming Life's 9/11's: Job's Journey and a Voice of One: Nehemiah's Prayer visit http://www.john-dillard.com/  (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!