It’s time to start looking at your own personal tax strategy for 2007. Plan now, so you can avoid a bad tax surprise later.
Today’s tip has to do with LLCs.
An LLC (Limited Liability Company) elects how it wants to be taxed. If you set one up this year, have you also elected how you want it to be taxed. In the past week, I’ve run into two people who didn’t make the election they thought they did.
For example, let’s say you have a business and correctly recognize that your LLC should be an S Corp or a C Corp. If it’s supposed to be a C Corp, you file a Form 8832 with the IRS and elect to be taxed as a C Corp. If it’s supposed to be an S Corp, you file a Form 8832 with the IRS and elect to be taxed as a Corp and THEN file Form 2553 and elect for your C Corp to be taxed as an S Corp.
OR better yet, if you don’t want to take the chance that you make the election wrong, then contact my guest blogger, Megan Hughes, through her company, Business First Formations. She’ll make sure you business structure is set up correctly the first time!
Either way, make sure you get this done BEFORE year-end. It’s possible to correct after the fact, but it’ll be a lot harder.