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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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Pearl, JA: The Accountant will know how to help. Please

Customer Question

Hi Pearl,
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I am a single member LLC newly formed
JA: Is there anything else the Accountant should be aware of?
Customer: I would like to be taxed the most favorable way possible using forms 2553 and 8832
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 7 months ago.
Category: Tax
Expert:  Lev replied 7 months ago.
As you just started - the best way is NOT to make any election - and your single member LLC would be classified as disregarded entity.After your business will take off - and you will have ~$40k-$50k in net business income - I might suggest to file form 8832 and elect your LLC to be treated as S-corporation - that will provide some saving on self-employment taxes.Otherwise - if your net business income is projected less than that amount - I would stay with the LLC as disregarded entity.Questions?
Customer: replied 7 months ago.
Ok when I file that form, which election do I choose in order to avoid the self employment tax? I will be well past those limits next year
Expert:  Lev replied 7 months ago.
First of all - you may NOT avoid the self employment tax - that is NOT realistic expectation.As you just starting -= I suggest NOT to file that form - and your single member LLC would be classified as disregarded entity under default rules - no special election required.You may do the election later when you will have substantial net income.

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