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Do I need to upgrade from a LLC to a Incorporation?

Saginaw, MI |

I have a LLC, and I'm the only member, but I don't want to file my company taxes with my personal income. I want to separate the two, so how do I go by doing this? Do I upgrade my LLC to a Incorporation, and what type of corporation?

My main view is, I'm a Single Member LLC, and I'm on SSDI due to my seizures. I don't wanna lose my SSDI because of I don't wanna lose my medicare, my medication without the government help is $500. So I'm trying to separate my personal income from my business income that way I can file my business taxes with my business name, so it wouldn't effect my SSDI. So I was thinking I can achieve this by upgrading my Single Member LLC as a C-Corporation, I have a EIN and a separate business bank account already. The business I'm running is a Record Company.

Attorney Answers 6

Posted

For federal tax purposes, you can elect to be treated as a corporation. See -- http://www.irs.gov/businesses/small/article/0,,id=158625,00.html
As well as Form 8832 and its instructions. These talk about making an election of your LLC's tax treatment, and specifically on the web page, discusses single member LLCs.

I suggest you talk with a business accountant or tax lawyer about your situation. For example, corporate form adds another level of tax on any income. Is that really the best decision for a single member LLC? You may want to consider an S-corp election, which allows you to pay yourself a salary, and take any extra income as a non-wage distribution (not subject to the self-employment taxes). However, the S-corp still flows through to your personal tax return, which as you say, is not what you want. Here is a link to some IRS information on S_corps --
http://www.irs.gov/businesses/small/article/0,,id=98263,00.html.

This answer or response should not be considered legal advice, and does not create an attorney-client relationship. If you have further questions, I would be glad to discuss your situation further. I can be reached at US - (801) 746-6300, or online at -- http://www.lewishansen.com/attorneys/robinson.html

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Asker

Posted

I'm a Single Member LLC, and I'm on SSDI. I don't wanna lose my SSDI because of I don't wanna lose my medicare, my medication is $500. So I'm trying to separate my personal income from my business income that way I can file my business taxes with my business name, so it wouldn't effect my SSDI. So I was thinking I can achieve this by upgrade my Single Member LLC as a C-Corporation, I have a EIN and a separate business bank account already.

Peyton Hunley Robinson

Peyton Hunley Robinson

Posted

I do not know much at all about SSDI, but I definitely understand your concern. If you have not already done so, you may want to confirm that owning the C-corp (with it being your business) will not jeopardize SSDI. If you do change to a C-corp, you will want be very sensitive to following the corporate formalities; but it sounds like you are giving it appropriate consideration. Best wishes.

Posted

It is generally possible to file the LLC data for a sole member LLC either on a separate return, or with your 1040 on a Schedule C. The income (or loss) from the LLC, however, will flow through to your personal return. It is a pass through entity. Without more information I do not understand your concern.
As for the various forms of limited liability entities, it will be necessary to have more information to determine which is the best to meet you needs.
I would recommend you call my office or seek the counsel of another attorney. Good luck.

To the PROSPECTIVE client, please call myself or another attorney for you choice with more detaiils and an appointment. My PRELIMINARY answer to your question(s) is for general purposes and based upon what little information you have conveyed. It is based on such limited information that the general answer should never be relied as a reason for your action or inaction. My response does NOT establish an attorney-client relationship and such may only be established by mutual agreement, and the signing of a written retainer agreement, which will generally require payment for our services, as this is what we do for a living and, just like you, we must get paid for our work.. .

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Posted

You should take Mr. Brennan up on his offer to speak with you. As for filing taxes, if you do not already have a CPA or tax attorney to work with you should probably find one.

LEGAL DISCLAIMER: This post is provided for informational purposes only; does not constitute legal advice; and does not create an attorney-client relationship.

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Posted

When you filed your llc, did you also get an EIN from the IRS? If not, I would suggest you do that first. When you get your EIN the form should tell you what tax form to file. I would suggest discussing all your options with an attorney and/or CPA.

Tara Moody-Nichol is licensed only in the State of Michigan. All answers provided relate only to Michigan law and are made for general information purposes ONLY. They are NOT intended to be legal advice and are NOT intended to create an attorney-client relationship between Ms. Moody-Nichol and any readers or subscribers to avvo.com. Tara Moody-Nichol Attorney at Moody & Nichol, PLLC East Lansing, MI (517) 583-0520

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Posted

I would strongly suggest calling your accountant or a tax attorney who has experience with this type of corporate structuring.

The response herein is for informational purposes only is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. I am a lawyer licensed in the State of Maryland only, and I am not your lawyer (unless you have been in my office and signed a contract). This communication is not intended as legal advice, and no attorney client relationship results. Please consult your own attorney for legal advice.

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Posted

talk to a cpa today you can elect to be treated as a sub s treatment like a sub s corporation where income passes through to you. The effect you pay one tax as a LLC like a sub S corp. there are restrictions so contact a cpa experienced in LLC

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