In this week's Freedom Friday blog and email newsletter, I'm going to talk about a topic that came up this past week with one of my clients. This is a question I get rather frequently, and it's always something along the lines of, “Should I create an LLC or an S-corporation?” Unfortunately, this is kind of a trick question, because you cannot create an S-corporation, and that's what I'm going to talk about in this week's blog and email newsletter.
In Oklahoma, you can form several different business entities, but you can't form an S-corporation. What you can form is a corporation, a nonstock corporation (often called a non-profit corporation), a limited liability company (LLC), a limited partnership (LP), or a limited liability partnership (LLP). You can also form professional versions of several of these business entities. However, you cannot form an S-corporation because an S-corporation is NOT a business entity. So, what IS an S-corporation, if its not a business entity? An S-corporation is actually a tax classification with the Internal Revenue Service (IRS).
Under some circumstances, you might be able to file under a subsection of the IRS Code, subsection S, which allows you to be taxed as if you were a corporation under that section of the tax code. Certain LLCs remain LLCs, but when you go to file the taxes for the LLC, the LLC may choose to be treated as if you were a corporation under subsection S of the IRS code.
Again, you cannot form an S-corporation. However, your LLC can potentially choose to be treated like it was a corporation under subsection S, when your LLC files its taxes. If you want more information about this issue, we encourage you to consult with a CPA or tax professional who can assist you in making a decision if an S-corporation tax election is right for your small business.
Thinking about starting a small business? Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth? Please contact me at [email protected] to schedule a FREE strategy session.
For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/