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View Full Version : Currently registered as S-Corp but want to revert back to filing as LLC - Possible?



Piper
03-04-2012, 10:43 AM
My tax accountant filed paperwork at the beginning of March 2011 to allow me to file as a S-Corp for 2011 (in Colorado).

As a photographer, I made $20k in revenue and had $17k in expenses (advertising, processing, etc.). I don't want to have to fill out multiple forms and pay myself a salary; this seems like it would be a problem since I would have a major loss if I paid myself regular wages, and where would this come from?

I also want to keep my taxes as simple as possible. I may not have managed the S-Corp correctly in 2011 year since I did not file any forms throughout the year, but I wasn't making any money and didn't give it much thought. And I really don't have the funds to pay my tax accountant another $2k...

I am winding down the business in 2012 and now doing it only as a side business instead of full-time employment. I expect it to generate about $4k in 2012.

Can I simply file as an LLC instead of an S-Corp in 2011 and be taxed at the higher rate on the $3k of net earnings?

Evan
03-04-2012, 10:34 PM
No.  You need to file with how you were legally formed in 2011, and need to continue as an S-Corp.

tmerrill
05-02-2012, 08:45 AM
To add to Evan's answer. You would have to legally register you business as an LLC with the state of Colorado to file as an LLC. And that would only apply to any taxes moving forward into the future, not for the taxes from the previous year.

I am also a little surprised that your accountant costs $2,000. I have a business but it only costs about $300 for my taxes to be prepared. Have you considered finding a cheaper, yet quality, accountant?

Evan
05-03-2012, 09:31 PM
I am also a little surprised that your accountant costs $2,000. I have a business but it only costs about $300 for my taxes to be prepared. Have you considered finding a cheaper, yet quality, accountant?

The price you pay can vary greatly, but so will the experience of the accountant and the services they'll provide you. $300 for a business return may be it. With $2,000, you may also get unlimited calls to him for advice and other things throughout the year. Plus keep in mind as an S-Corp, you also have quarterly tax filings to deal with and that easily runs another $300 even for returns with no activity.

lucas.bowser
05-04-2012, 12:33 PM
Might it be that the $2000 he is referring to was the cost of registering and setting up the business as an S-Corp to begin with? That's how I read it. He doesn't want to pay the cost of switching to an LLC from the S-Corp, with the assumption it would cost about the same.

Business Attorney
05-04-2012, 11:27 PM
Hopefully the OP will revisit the thread and clarify the facts. It is interesting how each of us is interpreting the facts differently. When I read the heading and the post, my assumption was that the business was formed as an LLC before 2011 and elected to be treated as an S corp in 2011, which is why his heading asks whether he can "revert back to filing as an LLC."

In any event, the answer is that the only way you can terminate an S corporation election for a current year is to file before the 15th day of the third month. Once that date passes, you are going to have to file a S corporation return for the year. Assuming he files on a calendar year basis, once March 15 passed by, there was no way to get out of filing a Form 1120S for both 2011 and 2012.