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WiseOwl58, Attorney
Category: Business Law
Satisfied Customers: 3686
Experience:  Experienced business lawyer.
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My partner and I just opened a small marketing firm. We registered

Customer Question

My partner and I just opened a small marketing firm. We registered ourselves as an LLC with 2 active members.

I would like to know when it comes to taxes, should we claim as an LLC or an S Corp?

What is the advantage and disadvantage from one to the other especially in our partnership situation?

I was informed that when you are an LLC and you pay yourself, you will get taxed twice? Is this true.
Submitted: 5 years ago.
Category: Business Law
Expert:  WiseOwl58 replied 5 years ago.
Well, if you have already organized as an LLC, then you must claim as an LLC on your income tax.

The truth of the matter is that an LLC and an S-corporation are both taxed the same way. That is to say that neither the LLC or the S-corporation pay taxes at the corporate level and all of the income is passed through to the individual tax returns of the owners on a pro rata basis.

Your comment about double taxation refers to a C-corporation, which is different from an S-corporation. C-corporations have to file tax returns and pay taxes at the corporate level, and then when the income is sent to the owners as dividends, it is taxed again.

You are in good shape with either an LLC or an S corporation, but since you have filed with the Florida Secretary of State as an LLC, that is how you will report on your tax returns.

Good luck to you. Please press the green ACCEPT button. Thanks.