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- Timing to convert from self employment to S Corp
Timing to convert from self employment to S Corp
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kirkavery
Level 3
06-11-2023
10:45 AM
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The guidance I have read is not clear to me when converting a business from reporting as self employment to an S Corp what date(s) are available to make it effective.
If the client sets up an LLC, effective July 1, 2023 and immediately files Form 2553 to elect treatment as an S Corp, can the 2023 tax year be split Jan to Jun as SE income and Jul to Dec as Sub S income or does he have to wait until the following year, January 1, 2024, to start being taxed as an S Corp?
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TaxGuyBill
Level 15
06-11-2023
02:48 PM
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They can elect S-status immediately when the LLC was formed (July 1st, 2023).
So yes, the self employment income from January through June would be on Schedule C, and the LLC/S-corporation would file starting July 1st (a "short year" return, assuming they use a calendar year).
