I have a small business in OKC and I would like to file the S-corp election this year. I am trying to fill in the necessary forms and a simple google search resulted in the following information:

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For tax purposes, by default, an LLC with one member is treated as a sole proprietorship. By default, LLCs with more than one member are treated as partnerships. However, an LLC can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election. And, once it has elected to be taxed as a corporation, an LLC can file a Form 2553, Election by a Small Business Corporation, to elect tax treatment as an S corporation.

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I need fill in an (1) 8832 Entity Classification Election and a (2) 2553 Election by a Small Business Corporation.

I am a little lost on how to fill in some of these documents. I may call my attny, but I figured I would dig a bit deeper and post to B&I forum first.

Is my understanding above correct?

Sounds right. There's a retroactive time period available, so check due dates to make sure you're effective on the date you plan.

You're essentially electing to treat your LLC as a C Corp and then electing to treat that as an S Corp.

Thank you OABrent, your comment is helpful. I think I have a bit longer to get 2019 to qualify.

I think I have it except for the following question:


On form 8832 it asks the following

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6. Type of entity:

a domestic eligible entity electing to be classified as an association taxable as a corporation.
b domestic eligible entity electing to be classified as a partnership.
c domestic eligible entity with a single owner electing to be disregarded as a separate entity.

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As it is a domestic entity and I am 100% owner, my guess is option C. Or should I select option A?

You don't need to file both. Form 2553 will cover both purposes.

Agree - just file the 2553.

Thanks TExasAggie98 and gigemhilo.

Follow-up question for P&L.

Prior to the S-corp election, I just put any 'personal draw' into an account called "Officer Compensation" on the P&L, which I believe was disregarded for tax purposes (i.e. wasn't expensed).

Now I am paying myself a salary, should I create another P&L line item called "Officer Draw" to identify money not paid for S-corp purposes?


Thank you in advance!!!

Sorry if I am not using the correct terminology.

1. P&L Account "Officer Compensation" should be your W-2 pay.
2. BS Account "Shareholder Distribution" should be distributed earnings & profits ie your bottom line residual.

Curious if you discussed with a CPA - you can shoot me a PM and I can give you my number if you want to chat for a few.

freecashflow said:

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1. P&L Account "Officer Compensation" should be your W-2 pay.
2. BS Account "Shareholder Distribution" should be distributed earnings & profits ie your bottom line residual.

Curious if you discussed with a CPA - you can shoot me a PM and I can give you my number if you want to chat for a few.

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Thank you! That makes more sense.

I have discussed with my new CPA at a high level, and she knows that I made the election, but she is still working through my taxes for 2018.


Thank you for offer for a P.M. I may take you up on that offer if I have more questions.