LLC C CorpTwo boxes, two tax lives
A formation screen offers two boxes, and each one is a tax life.
Steven Palmieri is the Tax CFO and the Entrepreneur's CFO, and this screen is the two boxes before a company exists.
Read the boxes- Books kept after the tick.
- A payroll rail handed to a provider the company keeps.
- A return from a month the bank agreed.
Name the two boxes
You will be talking to the Steven Palmieri practice.
Name the box you are leaning toward.
The Tax CFO way
An accountant can count the year after the box is already ticked. A Tax CFO decides what happens next, before you tick: whether profit stays in the company, whether a wage will be paid, and whether a second owner is coming. Then we keep the books that life requires.
What a corporate box does to a dollar
Tick the corporate box and the company becomes its own taxpayer. Profit that stays in the company is taxed on the company's return. Profit that leaves as a dividend is taxed again to the person who receives it. That second tax is the part owners feel in April and did not see on the day they signed.
Wages are different. Pay for real work can be deducted when it is reasonable for the job. We do not invent the wage. We keep the books that show what was paid, to whom, and for what. A calendar-year corporate return is due on the 15th day of the fourth month. That date is the same kind of deadline in every state. The state where you file the certificate does not move it.
Leaving money in the company is a choice with a cost. Taking it out as a dividend is a different choice with a different cost. Neither one is a trick. The books have to show which one you did, because the return can only follow the books.
What an LLC still leaves open
An LLC is a company under state law. It is not, by itself, a federal tax choice. A solo owner who never filed an election usually reports the shop on the return they already file. Two or more owners and no election, and the default is a partnership return. People are surprised by both of those, because the certificate felt like a finish line.
Form 8832 is the form that elects corporate treatment. Form 2553 is a later form, the S election, and it is not this screen. A K-1 shows up only if that later election exists. If you have not filed it, there is no K-1 to wait for. This page is the moment before either form, when the only honest question is which tax life you want.
Changing your mind after the tick is slow. The books, the payroll rail, and the return all have to be rebuilt around the new answer. That delay is the reason the two boxes are read before any certificate exists. A receipt from the shop and a notice from a bank can wait. The box cannot.
The first month after either box
Before the first real month, two jobs have to exist. The books have to have a place to live, and payroll has to be set up with a provider you run. We set that rail up. After the rail exists, the provider does the math and the company sends the pay. After setup, payday belongs to the company and the provider.
A month closes when the bank agrees with the books, not when the calendar page turns. An open month is either repaired or declined. We say which one before a fee is quoted. Estimates during the year are the habit of setting money aside while the year is still happening, so the fourth month is not a surprise. No fraction of profit is published on this screen. The right amount is a fact about your year, and it belongs in the work, not in a paragraph.
The legal name on a certificate and the name on a tax form are not always the same string. We read both. We do not file the certificate. A lawyer or the state filing office does that. Liability, the question of whose assets stand behind a debt, is a lawyer's subject. We will not borrow it.
After the tick
The next month starts on paper, not in a speech.
Click to see the next month ›Tap to see the next month ›
Who files it
We do not file the certificate with the state.
Click to see who files ›Tap to see who files ›The C box
A corporation files its own return.
Click to open the C box ›Tap to open the C box ›The LLC box
A company can still land on your return.
Click to open the LLC box ›Tap to open the LLC box ›The fee
You pay us for the reading, not for a stamp.
Click to read the fee ›Tap to read the fee ›A made up shop
One counter, clearly labelled as fiction.
Click to read the shop ›Tap to read the shop ›Six troubles on a formation screen
Open a card. Each one names the trouble and the person who can take the next step.
1Two boxes, no company yet
We read both tax lives before a certificate exists.
The screen is the choice. The filing office is a later errand.
2A dividend and a wage look the same
We separate pay for work from money that simply comes out.
On a corporate return those two exits are not the same line.
3One owner, no federal form yet
We say the default out loud before anyone ticks a box.
A company on paper can still land on the owner's own return.
4Payroll has nowhere to live
We set up a provider you run. We do not run payday.
The first real wage needs a rail before the month begins.
5The bank and the books disagree
The bank has to match the books before that card counts the month as finished.
Putting a signature on a return while the month is still open is signing a guess.
6A fee that might be the state's
Our fee is the reading and the monthly work, not a filing charge.
The state publishes its own charge. Our charge waits for the letter.
Who reads the screen
Steven Palmieri, the Tax CFO and the Entrepreneur's CFO, keeps the books for the box you tick, sets up payroll with a provider you run, and prepares the return from a month the bank has already agreed.
Send the screen
You will be talking to the Steven Palmieri practice.
Say which box you are holding, even if the company does not exist yet.