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

Asked almost 2 years ago - 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?

Additional information

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)

  1. Peyton Hunley Robinson

    Contributor Level 12

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    Answered . For federal tax purposes, you can elect to be treated as a corporation. See -- http://www.irs.gov/businesses/small/article/0,,...
    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,,....

    This answer or response should not be considered legal advice, and does not create an attorney-client relationship.... more
  2. John F. Brennan

    Contributor Level 19

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    Answered . 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... more
  3. Tara E. Nichol

    Contributor Level 13

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    Answered . 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... more
  4. Daniel Joseph Miller

    Contributor Level 10

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    Answered . 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... more
  5. Ronald Lee Bell

    Pro

    Contributor Level 14

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    Answered . 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

  6. Abraham Thomas Schwager

    Contributor Level 11

    2

    Lawyers agree

    Answered . 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... more

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