Can I avoid taxes by filing as an S corp? 3 Answers as of April 19, 2011As a 1 member LLC, I want to take advantage of the tax treatment that an "S" corp entitles me to. Is this a wise move or should I just stick with the LLC and not file form 2553. I want to pay myself a reasonable salary, then take distributions to avoid the employment tax, thereby saving a significant amount in taxes.
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
These are questions you should have asked BEFORE you formed an LLC. Now, to effectuate this change you must file a Form 8832. Even with this election, you still need to pay yourself a reasonable salary. The IRS has increased their policing of this area so you need to be prudent here in the allocation of salary and net income passed through to you as an S shareholder. In any event, you need to talk with a tax attorney before you do anything.
Answer Applies to: Pennsylvania