topic New 2-member LLC (2021) to file taxes as C corp in Business & farm

New 2-member LLC (2021) to file taxes as C corp

Anonymous — Mon, 09 Mar 2026 04:35:42 GMT

Hello,

My wife and I started a new LLC (2-members) in 2021 and would like to file taxes as 'C' corp. Is this something we can do? We would like to separate the business taxes (as C corp) from our personal taxes.

Please advise and let me know if you can help with filing our business taxes too.

Thanks!

Re: New 2-member LLC (2021) to file taxes as C corp

JillS56 — Tue, 01 Mar 2022 01:27:58 GMT

No, you cannot file as a C Corporation. If you are married, you and your spouse are considered one owner and can elect to be treated as an single member LLC. As a single member LLC, you can elect to file as an S-Corporation. To qualify for S corporation status, the corporation must meet the following requirements:

Be a domestic corporation
Have only allowable shareholders
- May be individuals, certain trusts, and estates and
- May not be partnerships, corporations or non-resident alien shareholders
Have no more than 100 shareholders
Have only one class of stock
Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

There are also payroll requirements for officers/owners of an S-Corporation.

S-Corporation

Otherwise, you would file as a Schedule C and will calculate self-employment tax on the net profits of the business.

Re: New 2-member LLC (2021) to file taxes as C corp

Mike9241 — Tue, 01 Mar 2022 01:32:11 GMT

First did you file an election for the LLC to be taxed as a C-corp. form 8832

When To File. your late if you wanted this for 2021. for 2021 for timely election it had to be filed by march 15 ,2022
Generally, an election specifying an eligible
entity’s classification cannot take effect more
than 75 days prior to the date the election is
filed. An eligible entity may be eligible for late election
relief in certain circumstances. For more
information, see Late Election Relief, later.
Generally, an election specifying an eligible
entity’s classification cannot take effect more
than 75 days prior to the date the election is
filed, nor can it take effect later than 12
months after the date the election is filed. An
eligible entity may be eligible for late election
relief in certain circumstances. For more
information, see Late Election Relief, later.

https://www.irs.gov/pub/irs-pdf/f8832.pdf

see page 6 to see if you qualify for late election relief.

a calendar C-Corp for 2021 is due by 3/15/2022

you do not have much time to file and get response on C-corp election

if you have not done so already you should get professional guidance at least for the first year. the laws are complicated and making a mistake can be extremely costly

there is more to running a corp than operating as an incorporated business.

things like salary, workmen's comp insurance. filing payroll tax returns.

on a go-it-alone basis, Turbotax Business can handle the C-Corp return and help you through payroll issues.

also, note that while salaries reduce taxable income. taking out other money - dividends do not reduce taxable income of the corp but are additional taxable income to you. another catch to C-corps is they can not accumulate unlimited amounts of profits without making dividend distributions.

IRC 531 comes into play. excess accumulated taxable income can be subject to a 20% additional tax besides the regular taxes you paid on the income.

Re: New 2-member LLC (2021) to file taxes as C corp

AmeliesUncle — Tue, 01 Mar 2022 03:55:56 GMT

As Mike indicated, things get complicated, and you really, really need to sit down with a good tax professional to assess your situation and explain all of the things that are involved with a C-corporation.