When you form a limited liability company (LLC), it is automatically assigned a "default" tax status unless you choose otherwise. One-member LLCs are generally taxed as sole proprietorships, and those with multiple members are taxed as partnerships. It is important, though, to have the best-available tax classification for your limited liability company (LLC) in order to maximize your tax savings. So after weighing the options, you may decide that it's advantageous for your LLC to change its tax status. You can accomplish this by filing
IRS Form 8832.
By filing out this tax form you can choose a tax status for your entity besides the default status. According to your objectives, you can elect to have your LLC taxed as a sole proprietorship, partnership, c corporation or s corporation. In some cases, by changing its tax status, a company can save thousands of dollars in taxes each year. Not every type of business can use Form 8832 to change their business’s tax classification. The following are considered eligible businesses for filing Form 8832:
Partnerships
Single-member LLCs
Multi-member LLCs
Certain types of foreign entities
At this point you must have got an idea what is the process to fill out this tax form. If you have decided to manage everything on your own then it is more important. In that case, keeping up with all the deadlines can become a little but difficult for you. This is why most of the people are thinking about hiring a tax professional these days. If you are thinking how to start, you can give us a call on
+1-866-301-2307 You will get your questions answered.
