Should I make a C-Corp to own my LLC?

**ltn1dr** · 07-20-2006, 06:17 PM

Here's my plight.

I'm 16, going to be 17 in less than a month.

My mom already owns a C-Corp just for investing, and I own an LLC for my net business.

Now, I want to be applying for financial aid in college, and unfortunately, LLC's are pass-through entities, meaning that whatever they make me will show up on my personal tax return.

If I own my share of the LLC through a C-Corp, I can pay myself a small salary from my corporation, and leave the rest in it. I wouldn't be taxed any extra, because I'd just make sure my LLC was taxed as a partnership.

What do you guys think?

**imported_Alexis** · 07-22-2006, 09:08 PM

You should talk to an accountant because C corporations have two levels of taxation. Once at the individual level and once at the corporation level. For example, if the corporation makes $100, the corporation is taxed on the $100. Then whatever is left (let's if the tax on C corps is 25% then only $75 is left), and eventually distributed out to you will be taxed again. So if you are at a 25% tax rate, then you will only see less than $60 (can't do the exact math). So you could see less money in the end.

LLCs are generally taxed as pass throughs (as if you earned the income individually) - unless you elected to treat it like a corporation - so you may see money in the bottom line.

Everyone's facts and circumstances are different, so remember this is just general background info. If you have a C corp and a LLC you must have an accountant. I can't imagine that you are doing the returns. I know I don't/ Talk to your accountant or tax attorney.

Alexis
http://www.AmericanInventorSpot.com

**petertdavis** · 07-22-2006, 09:13 PM

I agree strongly with Alexis. This is something only qualified CPA and/or lawyer should be giving you advice about. In fact, it could potentially be seen as illegal for anyone to be giving you advice like that, unless they are licensed to do so in your state.

**imported_mill** · 07-22-2006, 10:08 PM

You could always desolve the llc or turn it over to your mother. But still this is iffy due to the fact that you would possibly be commiting loan fraud when you apply for student loans.

Be careful what you do, but I would say to get a CPA also and to be truthful on your student loans, it can come back to bite you in the arse.

**ltn1dr** · 07-28-2006, 12:55 PM

Quote:

Originally Posted by Alexis

You should talk to an accountant because C corporations have two levels of taxation. Once at the individual level and once at the corporation level. For example, if the corporation makes $100, the corporation is taxed on the $100. Then whatever is left (let's if the tax on C corps is 25% then only $75 is left), and eventually distributed out to you will be taxed again. So if you are at a 25% tax rate, then you will only see less than $60 (can't do the exact math). So you could see less money in the end.

LLCs are generally taxed as pass throughs (as if you earned the income individually) - unless you elected to treat it like a corporation - so you may see money in the bottom line.

Everyone's facts and circumstances are different, so remember this is just general background info. If you have a C corp and a LLC you must have an accountant. I can't imagine that you are doing the returns. I know I don't/ Talk to your accountant or tax attorney.

Alexis
http://www.AmericanInventorSpot.com

The difference with this is --- If the corporation makes, say, $100. I just pay out $50 to myself and $50 to my partner, as salaries. That way, the corporation doesn't actually pay any taxes, and only I do on the individual level.
Lol, I don't have a real accountant.

**Plugin-Developer** · 07-28-2006, 01:28 PM

I'd have to speak up in favor of a CPA also. They're highly qualified, and often you can get a free consultation with one if you're professional about what you do. CPAs do this stuff all the time and can really help you decide how to manage your money.

Get a fee-based CPA and talk to them. See what you should do.

-Nick

**ltn1dr** · 07-28-2006, 05:16 PM

Quote:

Originally Posted by nickohrn

I'd have to speak up in favor of a CPA also. They're highly qualified, and often you can get a free consultation with one if you're professional about what you do. CPAs do this stuff all the time and can really help you decide how to manage your money.

Get a fee-based CPA and talk to them. See what you should do.

-Nick

I actually already found out what I'm going to do. The internet is a wonderful resource.

All I have to do is file form 8832 and select to have my LLC taxes as a C-Corp instead of a partnership.

That solves everything.

**kkibak00** · 09-06-2006, 06:44 PM

Quote:

Originally Posted by ltn1dr

I actually already found out what I'm going to do. The internet is a wonderful resource.

All I have to do is file form 8832 and select to have my LLC taxes as a C-Corp instead of a partnership.

That solves everything.

I'm sort of confused about the 8832. I recently formed a California LLC and haven't filed the entity classification yet (8832)--do you have any links or resources on this? in my specific case I am the only employee of the LLC.

**ltn1dr** · 09-12-2006, 08:53 PM

Quote:

Originally Posted by kkibak00

I'm sort of confused about the 8832. I recently formed a California LLC and haven't filed the entity classification yet (8832)--do you have any links or resources on this? in my specific case I am the only employee of the LLC.

I ended up filing 8832 only because I didn't want to be taxed as a partnership and wanted to be taxed instead as a corporation.

You don't really need to file the 8832.

**IsMaR** · 09-13-2006, 05:05 AM

i suggest you get a CPA, lol

**fkj** · 09-13-2006, 09:40 AM

The worst advice you can get is free advice! Go see your CPA AND your attorney!

**IsMaR** · 09-13-2006, 10:35 AM

Quote:

Originally Posted by fkj

The worst advice you can get is free advice! Go see your CPA AND your attorney!

its the most expensive advice

**D.J.** · 09-13-2006, 11:15 AM

It depends who´s free advice it´s actually ...

**WebNinja** · 09-21-2006, 12:39 PM

If you file for "S-Corp" designation, there are no corporate taxes levied against the entity's income...