Get the best tax status for your Limited Liability Company.
When you form a limited liability company (LLC), it is automatically assigned a "default" tax status unless you choose otherwise. One-member LLCs are generally taxed as sole proprietorships, and those with multiple members are taxed as partnerships.
It's important, though, to have the best-available tax classification for your limited liability company (LLC) in order to maximize your tax savings. So after weighing the options, you may decide that it's advantageous for your LLC to change its tax status. You can accomplish this by filing Internal Revenue Service Form 8832.
By filing Form 8832 with the IRS, you can choose a tax status for your entity besides the default status. According to your objectives, you can elect to have your LLC taxed as a sole proprietorship, partnership, c corporation or s corporation. In some cases, by changing its tax status, a company can save thousands of dollars in taxes each year.
Find out more about business tax classifications by visiting our Frequently Asked Questions section.
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LLC Tax Status Election FAQs
- What is Form 8832?
- Do I have to file this?
- Why would I file the 8832?
- When do I file the 8832?
- How can incorporate.com help?
What is Form 8832?
Form 8832 is the Entity Classification Election form from the IRS. It is filed to elect a tax status other than the default status for your entity. For example, an LLC can elect to be taxed as a C Corporation.Back to Top
Do I have to file Form 8832?
No, this is an optional form that is filed if you would like your LLC to be taxed as a corporation. After it is filed, your LLC will file a corporate tax return and be subject to corporate tax rates.Back to Top
Why would I file the 8832?
LLCs by default have pass-through taxation, where profits and losses are reported on the members personal tax returns. C Corporations are subject to corporate tax rates and shareholders are taxed on dividends received. This is referred to as "double taxation". We recommend consulting an accountant to see what is best for your business.Back to Top
When do I file Form 8832?
Form 8832 is filed within 75 days of the formation of your company. If you miss this timeframe, the IRS allows it to be filed in the first 75 days of each fiscal year.Back to Top
How can incorporate.com help?
- Help you complete Form 8832
- Provide detailed instructions for mailing to the IRS
- Provide a 30-minute tax consultation with an Accountant
- Review Form 8832 and your specific tax situation
- Offer help with any other tax related questions