Today TaxMama® hears from Shar in the TaxQuips Forum, with this observation. “If you start an LLC and elect to have it be taxed as a C-Corp, does this election require you to follow all the ongoing requirements of your state for maintaining a C-Corp (corporate minutes, complete set of books, etc.)? Or can you continue following the much easier requirements for maintaining and running an LLC? If so, this setup might be the best of both worlds – getting all the benefits of C Corp, such as all the fringe benefits for the owner; while, at the same time, taking advantage of the relative ease of running an LLC.”
Yes, that’s an excellent point. And the very reason many people select the LLC entity before electing to file their tax returns as C Corps.
However, over the years I have found that if you do not keep minutes and maintain good records about corporate/LLC decisions, you’re at a disadvantage in an audit.
As to not keeping books? That’s one of the more irresponsible concepts of all!
However, even when you don’t maintain all the corporate niceties, you are protected from having the veil of the ‘corporation’ pierced in an audit, since it’s not a corporation.
And remember, you can find answers to all kinds of questions about LLCs and other tax and business issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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