When an LLC elects to be taxed as a corporation (whether as a C corp or an S corp) which recordation rules are they subject to. Specifically:
asked 18 Nov '09, 16:21
Electing to be taxed as an S-Corp does not change the fact that it is an LLC. The more stringent record keeping requirements for an S-Corp would not apply.
Not strictly related to your question, but I some related points I think are interesting:
There may be state tax considerations. In New York, the annual filing fee for an LLC is less than for an S-Corp.
There are differences related to personal liability. Most articles focus on the liability protection an S-Corp or LLC affords its owner. A colleague shared an article with me, which unfortunately I can not find at the moment, of a case where an individual was sued personally. He happened to own an S-Corp, which was able to be attached as an asset. The article maintained if it had been an LLC, that might not have been the case.
Finally, one requirement that can not be avoided with this case is the S-Corp's requirement to pay a reasonable wage. An LLC electing to be treated as an S-Corp must still pay a reasonable salary to the owner before making distributions.
I'm finding all sorts of opinions all over the web (usually stated as fact). However, I believe:
answered 18 Nov '09, 17:27
With regard to Schedule L treatment, I've typically observed the LLC's capital disclosed as either paid in capital or included with retained earnings; The latter is probably the option I've witnessed the most, however!
Since there really is no "technical guidance" that I'm aware of, it appears to be a matter of "personal preference", but I would prefer to include it with retained earnings and disclose it in Schedule M-2 as a capital contribution.
answered 18 Nov '09, 17:45
The LLC is governed by your state's laws relating to LLCs, regardless of the tax election. However, making an S election subjects the LLC to all of the tax laws and structural restrictions applicable to S corporations.
answered 18 Feb '10, 18:36