How Do You Sign For an LLC Taxed as an S Corp? | USTaxAid

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How Do You Sign For an LLC Taxed as an S Corp?

Written by Diane Kennedy, CPA on January 22, 2022

An LLC is a tax chameleon. There is no such thing as an LLC tax return. You can elect how you want to be taxed. If you don’t make an election, then there is a default tax structure. A single member LLC is taxed like a Schedule C, Sole Proprietorship. A multi member LLC is taxed like a partnership.

A question that often comes up has to do with LLCs that have elected to be taxed as an S Corporation. If you stick with the default LLC structure, owners are called members. The people who make the decisions are called managers. You could have a member-managed LLC or a manager-managed LLC. In a member-managed LLC, the members run the LLC. In a manager-managed LLC, the members elect one or more managers. The manager(s) may be owners, or they might be an outside party.

Since one of the main reasons people set up LLCs is for asset protection, it’s important to follow the corporate formalities to keep that protection in place. That includes making sure you execute contracts properly. You do them on behalf of the entity, not as an individual. Do it wrong and you could lose all the asset protection you worked to set up. 

If you have the LLC in default taxation mode, you would sign as “member” or “manager.

But what if your LLC elects to be treated as a corporation? That would be an LLC-S (LLC electing to be an S Corporation) or LLC-C (LLC electing to be a C Corporation). 

Signing As An LLC-S Owner

S Corporations have officers like a president, vice-president, secretary and treasurer. Sometimes one person holds all of the offices. If you set up a straight S Corporation and not an LLC-S, you’ll need to follow state law on that. Some states want 2 or more officers on corporations. Others allow one person to hold all offices.

If you’re an LLC-S, though, for state registration purposes you are an LLC. For tax purposes at the federal and state level, though, you are an S Corporation.

How do you sign contracts? It doesn’t matter whether you choose to use LLC titles (member or manager) or corporation titles (president, etc.) as long as you are consistent.

Personally, I use corporation titles so that it stays consistent with the tax returns. For example, if I apply for a business credit card, the bank will want to see tax returns and they’ll be S Corporation returns (Form 1120-S). I’ve never had a bank care that I have an LLC that has elected S Corporation treatment. They just see S Corporation. And as such, they expect to see corporate officer titles.

Is it wrong to use the LLC titles? No. Just be consistent.

Here are some more articles about LLCs from USTaxAid. 

The Good News & Bad News About Series LLCs

https://www.ustaxaid.com/blog/the-good-news-and-bad-news-about-series-llcs/

How Many LLCs Do You Really Need?

https://www.ustaxaid.com/blog/how-many-llcs-do-you-need-to-protect-your-real-estate/

An LLC May Not Be Enough to Protect Your Assets

https://www.ustaxaid.com/blog/an-llc-may-not-be-enough-to-protect-your-assets/

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