Tom, if you elected to have your single member LLC taxed as a corp, would you receive ALL the benefits of an actual corp? ie, spliting income into salary and dividends? would you be able to take the same type of tax deductions, fringe benefits and retirement plans allowed for corps? even the things normally not allowed for LLC’s? It seems that the LLC has superior asset and legal protection but is not normally allowed the same range of tax benefits as corporations. I have been considering doing this as a way to get the best of both entities. Am I missing something? It seems so simple that I suspect I don’t really understand the law. Thanks for any help. mike
P.S. If you elect to be taxed as a corp does that affect the legal protection offered by the LLC? ie. charging orders, etc?
If I form a Single Member LLC, I have a choice of electing to be taxed as either a soleproprietor, a partnership, a corporation, or an S-corporation.
What are the advantages or disadvantages of each of these elections for a RE investor? Which is the best possible election that gives the best possible tax-advantage to a RE investor…Thanks for any input.
The default classification for a single member LLC is proprietorship. You can elect to be taxed as a corporation, then, if you so desire, you can file Form 2553 to elect S status. Partnership classification is available only for multiple member LLCs.
As far as the best choice, you need to talk to a competent tax advisor. It will depend on your current situation, your plans for the business, as well as other factors. A competend advisor can guide you as to which way is best for you.