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I have an LLC in NJ. My account told me I need to set up an S Corp to pay less in taxes. Can I just file an 8832 Form to change the classification of my company & file as an S Corp?
The answer to your question is no. To change the business from an LLC to an S Corp, you have to follow your state’s procedures for dissolving the LLC and forming a corporation. Then you have to submit a request to be taxed as an S corp.
However, I don’t understand how changing from an LLC to an S corp will save you taxes. Usually, the taxes are the same, in effect, they are both taxed the same as partnerships.
I think I have this sorted out.... I was told incorrectly by my account that I need to dissolve my LLC and form an S Corp to file taxes as a corporation. I contacted a tax attoreny and he told me I can file an 8832 to file taxes as a corp so there isn't any pass through as a partnership. He said you can file either way as an LLC. My account told me I paid a lot in extra taxes in 2001 as he didn't file as a corp. It is just confusing as I have a tax attorney telling me one thing and my account telling me something else.
I agree with the tax attorney. You can file the 8832 and have your LLC taxed as a corporation. That is not the same as setting up an S corp. However, in most cases, being taxed as a corporation that is not an S corporation, costs tax dollars rather than saving them. So, unless you are in a fairly unusual situation, I suggest you talk to the tax attorney and ask him/her if such a change would really save tax dollars.
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