Converting Your Business and the Tax Year

Written Apr 3, 2019 by Dan Nicholson

Filing for an S Corp or C Corp election is less about “How long?” and more about “Do I meet the requirements?” If filed correctly, you can convert your LLC to an S Corp or C Corp within the same tax year. Technically, you have two months and fifteen days from the first day of the LLC’s tax year to request S-Corporation status. The IRS does offer relief for late elections. A statement must be made expressing “reasonable cause” as to why the election is being filed late. To answer your question regarding time, if filed correctly, under most circumstances you can anticipate a response from the IRS within 60 days of the filing.

With regards to cost, there is no cost for filing for the elections. However, the IRS posted a recent survey showing the average costs of having a professional prepare an income tax return (Form 1120S) for a corporation to be approximately $761 for an S Corp and $806 for a C Corp (See here). These costs may be higher than you have traditionally paid for the preparation of an LLC’s tax return.

Understanding the tax landscape, and when to file an S or C Corp election can be complex. More information regarding Corporation filings can be found hereand here. And for assistance regarding these matters and more, visit Financial Telepathy and Nth Degree CPAs for digestible information and practical tools.