An LLC can choose to be taxed as an S-Corporation by filing Form 2553 with the IRS. This does not change the LLC’s structure but alters how it is taxed. The main benefit is potential savings on self-employment taxes, since owners can pay themselves a reasonable salary and take additional profits as distributions. However, S-Corp status comes with more rules and stricter IRS requirements. It is often most beneficial for LLCs with higher profits. Consulting a tax professional before making the election is wise.
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