How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lane Your Own Question
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10137
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

I am currently a sole proprietor, but want to become an LLC

Customer Question

I am currently a sole proprietor, but want to become an LLC taxed as an SCorp. The current business has an EIN attached to it. Can I transfer assets of current business to LLC and add DBA name of current business so I don't have to change anything except the EIN of business?
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Hi,

...

Yes, your assets will simply be your initial capital contribution to the LLC. Basis in any depreciable assets will simply transfer as well.

...

Once you have the EIN for the LLC you'll just use IRS form 2553 to elect S-Corp taxation

Customer: replied 11 months ago.
I can continue doing business in my "old name" it just has a new EIN and I will file an scorp return at end of year instead of sched C?
Expert:  Lane replied 11 months ago.

As an aside, the LLC provides the corporate liability protection without the additional administrative overhead (payroll, paying shareholder/employer a salary, doing quarterly b941 payroll tax returns, paying in SS&Medicare at least monthly, etc.) of the S-Corp.

...

It's only when you are highly profitable (well over your required "reasonable S-Corp salary and other expenses) that there is any tax savings ... and that's not on Federal or state taxes both the S-Corp and the LLC not taxed as an S-Corp pass through the income taxation to the owner... it's on that incremental profit that's reported on the K-1 tht no SS & Medicare is levied

Expert:  Lane replied 11 months ago.

Sorry looks like we crossed there... let me read...

Expert:  Lane replied 11 months ago.

Yes, as long as your name hasn't been taken (by another LLC or corporation) when you do that Sec of State name search to first set up the LLC .. and yes, you'll do an 1120-S, give yourself a salary (W-2) and a K-1 to pass the remaining income/loss to the 1040

Expert:  Lane replied 11 months ago.

Might I ask why you're doing the S-Corp rather than just LLC ... is it for that reason? (saving the 15.3%)

Customer: replied 11 months ago.
if the current name is ***** ***** taken, I can name it the same name as I have now and then I do not have to add a DBA?
Customer: replied 11 months ago.
income is pretty good and need to decrease my reduce taxes
Expert:  Lane replied 11 months ago.

That's right ... the DBA is just a registration of a fictitious name ... your LLC's name is ***** ***** the time you do the articles of organization

Customer: replied 11 months ago.
Thanks so much. I think that does it.
Expert:  Lane replied 11 months ago.

OK, I just see a LOT of folks ding S-Corps when they don't realize that there IS no tax savings in terms of income taxes

Expert:  Lane replied 11 months ago.

And a lot more administrative ovewrhead

...

You're very welcome...

...

Your positive rating … (by using the stars your screen) … is thanks enough! … That’s how we’re credited for the work here

...

Thank YOU

Lane

.

Expert:  Lane replied 11 months ago.

Other questions?

Expert:  Lane replied 11 months ago.

OK, don't see you coming back in...

...

If this HAS helped,and you don’t have additional questions on this, your positive rating… (by using the stars on your screen) …would be appreciated!That’s the only way I'll be credited a portion of what you've paid JustAnswer.

...

Lane