Businesses that want to change their tax classification to an S Corporation do not need to file Form 8832. Instead, they should file Form 2553. When a single-member LLC adds more members, the business will be taxed as a partnership. This is true unless the business files Form 8832 to change the classification. Frequently Asked Questions

What’s the difference between Form 8832 and Form 2553?

The biggest difference between Form 8832 and Form 2553 is the tax classification that you’re requesting. If you’re an LLC or partnership, use Form 8832 if you want to be taxed as a C-corp, partnership, or a sole proprietor. Meanwhile, Form 2553 is for LLCs or corporations that want to be taxed as S-corps.

When do you have to file Form 2553 for LLC?

Example: Your LLC (assuming the beginning of its next tax year starts January 1st, 2019) must file Form 2553 on or before March 15th, 2019. If you file within that period, then the S-Corp status takes effect in the 2019 tax year.

What are pros and cons of filing Form 8832?

Con: The LLC may receive better tax treatment as a Corporation. A Partnership or an LLC with at least two members might file Form 8832 to choose corporate tax status. Pro: Instead of each partner reporting their share of gains and losses, these are reported at the entity level. This may save money on taxes.

How is an eligible entity classified on Form 8832?

An eligible entity uses Form 8832 to elect how it will be classified for federal tax purposes, as: A corporation. A partnership. An entity disregarded as separate from its owner.

Where can I find the IRS Form 8832?

You can find form 8832 Instructions and a downloadable PDF version of the form on the official IRS website. Form 8832 Instructions as well as the 3-page digital version of the form can be found on the official IRS website. Before you start filling the 8832 out, you need to have the following information close:

Can a single member LLC file taxes as a sole proprietorship?

If it’s a single-member LLC and doesn’t file 8832, it will file its taxes exactly as a sole proprietorship (which is the default tax status for single-member LLCs). If it’s a multi-member LLC and doesn’t file 8832, it will file its taxes like a partnership by default.

Can a multi member LLC file as a C corporation?

If it’s a multi-member LLC and doesn’t file 8832, it will file its taxes like a partnership by default. If it opts to file for C corporation tax status by submitting Form 8832, it will file as a C corporation. If you want your LLC to be taxed as an S corporation, you don’t use Form 8832.