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emc011075, Tax adviser
Category: Finance
Satisfied Customers: 2940
Experience:  IRS licensed Enrolled Agent and tax instructor
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I have an S Corp. Two employees including myself. I'm sick

Customer Question

I have an S Corp. Two employees including myself. I'm sick of filing of corporation returns every year. Can I change to an LLC and just declare the profits as capital gains? Or do I still get stuck with filing an 1120?
Submitted: 1 year ago.
Category: Finance
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

If you are running a business, there always will be some type of "business" return to file. If you switch to single member LLC you will still have to file Schedule C - profit and loss from business with your 1040. If you have employees, you will still have to file payroll returns/taxes as well. Schedule C is not a separate tax return like 1120 but you will still have to separate your income and expenses and pay self-employment tax (social security and Medicare tax that is currently paid by the Scorp) You cannot just declare the net profit as capital gains.

Let me know if you have any questions.