How to Switch an LLC That Is Taxed as a Partnership to an S-Corporation
To switch the federal income tax classification of your limited liability company, you must file the appropriate forms with the Internal Revenue Service. If your LLC is currently classified as a partnership for federal income tax purposes, you can elect to change the LLC's classification to a corporation by filing Form 8853 with the IRS. After you elect to have the LLC taxed as a corporation, you can then elect to have your LLC taxed as an S corporation by filing Form 2553. However, the S corporation tax classification has certain restrictions that your LLC must comply with or the IRS will disallow the election.
Obtain IRS Form 8832, called "Entity Classification Election." The IRS makes the form available on its website, where it can be downloaded, prepared and printed for mailing to the IRS.
Prepare Form 8832 by inputting the appropriate information for your LLC, which includes the LLC name and principal business location, information regarding any previous elections for a change in tax classification, and information regarding the LLC's owners. On page 2 of the form, choose option "a" on line 6 — "domestic eligible entity electing to be classified as an association taxable as a corporation" — to elect a corporate tax classification for your LLC. The election will take effect the day the form is filed, or you can choose an effective date that is not sooner than 75 days before the form is filed or later than 12 months after filing. Insert the desired date on Line 8 of the form.
Complete Form 8832 by including the name, title and phone number of the person who can be contacted by the IRS regarding any questions concerning the form. If the LLC has an appointed manager who is authorized to make the election, the manager can sign and date the form for the LLC; however, if there is no such authorized manager, all of the LLC's owners — also referred to as members — must sign and date the form.
Mail the completed and signed Form 8832 to the appropriate IRS service center, which can be determined using the information provided on the IRS Web page "Where to File Tax Returns — Addresses Listed by Return Type." The IRS will notify you within 60 days of receiving Form 8832 whether the election has been accepted or rejected.
Obtain IRS Form 2553, called "Election by a Small Business Corporation," after receiving notice from the IRS that the election to change your LLC's tax classification to a corporation has been accepted. The IRS also makes Form 2553 available on its website, where it can be downloaded, prepared and printed for mailing to the IRS.
Prepare Form 2553 by inserting the required information for your LLC, which includes the LLC's name, principal business address, the date when the LLC was formed, the state where the LLC was formed and the LLC's IRS tax identification number. The form must indicate the tax year and effective date for the election. On page 2 of the form, insert the names and addresses of all LLC owners (referred to as "shareholders" on the form) who are required to consent to the election.
Complete Form 2553 by including on page 1 the name, title and phone number of the person who can be contacted by the IRS regarding any questions concerning the form. An authorized representative of the LLC must sign and date the form on page 1. Mail the completed and signed form to the appropriate IRS service center. The IRS will notify you within 60 days of receiving Form 2553 whether the election has been accepted or rejected.
Things You Will Need
IRS Form 8832 — Entity Classification Election
IRS Form 2553 — Election by a Small Business Corporation
A change in tax classification for an LLC can be made any time after the LLC's initial classification; however, once the change is made, the LLC must keep the new classification for a minimum period of 60 months before another change can be made.
Your LLC will not qualify for S corporation tax classification if it has more than 100 members, more than one membership classification or includes any member who is either a nonresident alien, partnership or corporation. Your LLC will also not qualify if it is an insurance company, financial institution or domestic international sales corporation.