Kiritsis & Associates
LLCs electing S Corps status have to go through a regulatory minefield, but if successful, a number of tax benefits can be in the horizon.
1. Lower self-employment taxes. Although, LLCs are thought of being scalable, meaning they are designed to change and adapt to the needs of a growing business, one of the areas, where an S Corp may provide more fertile ground for self-employment taxes.
2. Separate tax return. The LLC, especially a single member LLC taxed as disregarded entity wants to benefit from separate tax reporting filings, such as Form 1120S, but does not want (at least yet), elect C Corp tax treatment which file Form 1120.
3. Reduce tax audit risk. Generally, if properly structured and accurately reported, an S Corp could potentially be significantly less likely to be subjected to a tax audit.
4. Work around certain bankruptcy-related tax issues. Getting bankruptcy relief often requires a business to file past unfiled tax returns. It may be easier to basically, reverse engineer, and recreate certain bookkeeping reports by having the business be an S Corp rather than LLC, in certain situations.
5. Resolve certain divorce-related tax issues. In many divorce situations, such as, the two spouses still want to operate a business together, but want a lot of formalities, so that it does not create a further adversely and business dispute among the parties.
Law Offices of Kiritsis & Associates
Phone # 212 922 0005
Manhattan Office (Main Office):
633 Third Avenue
New York, NY 10017
Brooklyn Office (By Appointment Only):
1023 74th Street
Brooklyn, NY 11228
New Jersey Office:
7309 Ventnor Avenue
Ventnor, NJ 08406
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