S Corp Status For Llc In Utah
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To give your business S Corp tax status, you complete Form 2553 with the Internal Revenue Service (IRS). If you start your business as a Utah LLC, you have to complete Form 8832 to elect corporation status before you can begin filing Form 2553 to elect S Corp status.
An S corporation is not subject to Utah income tax. However, shareholders are liable for Utah income tax in their separate or individual capacities.
Because of the one-class-of-stock restriction, an S corporation cannot allocate losses or income to specific shareholders. Allocation of income and loss is governed by stock ownership, unlike partnerships or LLCs taxed as partnerships where the allocation can be set in the partnership agreement or operating agreement.
Utah LLCs will be treated as partnerships for tax purposes. Partnership tax treatment is advantageous because the earnings of a partnership are treated as the earnings of its partners. No separate tax is imposed on the partnership entity.
If you start your business as a Utah LLC, you have to complete Form 8832 to elect corporation status before you can begin filing Form 2553 to elect S Corp status.
S Corporation in Utah: Key Points S corp status is a tax classification that applies to an LLC or a C corporation. Entrepreneurs must create one of the two business entities before electing S corp status. Entrepreneurs must file form 2553 to select S corp status within 75 days of creating their LLC or C corporation.
