Atlanta CPA Advises Taxpayers on Converting their Business from an LLC to an S Corporation

Atlanta CPA Advises Taxpayers on Converting their Business from an LLC to an S Corporation

One of the most frequent questions we get each and every week is from Georgia business owners seeking to discover what entity type they should be. Below is a sample letter that we might receive researching entity selection issues:

Love your site as it has given me tons of information to consider. I am starting my graphic design business and I'm in the process now of getting my company rolling. I wanted to know what your consult fee is, how much do you charge for CPA services and if you have dealt with single-member LLCs which are disregarded entities (non-corp.)? I have learned about what taxes I would need to pay and which ones I don't, but having someone help me to get my information solidified is always needed. I am a Christian brother, so I know any help would be sincere and helpful. Thank you in advance. Romans 1:16

Below is my response:

LLC's came in vogue approximately twenty years ago when the state of Georgia enacted legislation allowing an LLC (Limited Liability Company) to be established. Although the LLC does allow for some greater flexibility and ease of operation it often results in a higher tax obligation that might not have been incurred if the business was an S Corporation. Tax law treats all the earned income from an LLC as being subject to both FICA & Medicaid taxes whereas an S Corporation has to pay those taxes reflected on W-2's. For tax purposes, the law allows an S Corporation to legally convert to being an S Corporation as long as all active employee/owners pay themselves a fair and reasonable salary. This number is best determined by the facts, position, and profit of a business and the truest test of this calculation is what a business owner would have to pay someone else to perform their position.

There are four rules to qualify for being an S Corporation. You must Have a December 31st year-end, Have less than 100 shareholders, Have shareholders who are U.S. citizens or resident aliens and Have only one class of stock. We offer a free initial consultation to see if converting your business to an S Corporation for tax purposes makes sense to you. Put our decades of experience to work for you ensuring you pay your lowest legal possible tax. To learn more about tax entities and the taxation thereof visit http://www.hiscpa.com/article2.html  There you will also discover a wide host of resources for American Entrepreneurs. A Christian CPA Firm: Never Underestimate the Long Term Benefits

John Dillard is an Christian Speaker/Author and a Duluth GA CPA. 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/  or call John Dillard CPA today at 770.814.9304 (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!