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 Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15203
Experience:  15years with H & R Block. Divisional leader, Instructor
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I am considering converting my single owner LLC to an SCorp

This answer was rated:

I am considering converting my single owner LLC to an SCorp for tax purposes, giving myself a reasonable salary. Is that prudent or should I stay as I am now an LLC disregarded entity?

Robin D :

Hello and thank you for using Just Answer,

Robin D :

S corporations may have preferable self-employment taxes compared to the LLC because the owner can be treated as an employee and paid a reasonable salary. FICA taxes are withheld and paid on that amount. The owner of an LLC is considered to be self-employed and must pay the self-employment tax contributions towards Medicare and social security.
Some benefits that shareholder/employees receive can be written off as business expenses,.but you an employee who owns 2% or more shares, the benefits like health and life insurance are deemed taxable income.
You'll have to make a special election with the IRS to have the LLC taxed as an S-Corp using Form 2553. And you must file it before the first two months and fifteen days of the beginning of the tax year in which the election is to take effect.

Robin D :

I know it is difficult and you wan tto make sure that you do the right thing when making choices. I would advise you to work closely with your personal accountant as they can show you the actual dollar amounts involved in both entities. You will then be able to see the choices on paper dealing with real dollar amounts and how any savings on taxes would effect you.


Thanks that is helpful. I didn't know about the fact that you have to declare medical insurance as taxable income. Given the fact that our insurance is fairly high that could make a difference. In putting together the numbers from a tax perspective it seems reasonable to move to an S Corp status. Do you see any limits to flexibility that could be cause issues if I sell the business?

Robin D. and 2 other Tax Specialists are ready to help you