SubS VS Sche C

[Kurly]

Can a husband wife currently doing business as a SubS, file a final SubS and then continue with the same name filing as Sche C income?

This is a very small SubS (Nets about $20,000 per year).

If so can they continue using the same EIN on their Sche C?

They would like to get away from having to issue two W2's each year. And having to pay for unemployment taxes, quarterly tax deposits etc.

They are both in their 70's , collecting Social Security, therefore could not collect Unemployment.

They have no employees (just the two of them work the business).

The business is designing business forms, mainly invoices for printing companies.

There main assets are a desk and computer system (working from their home utilizing one small room).

[oceanlovin'ea]

The EIN belongs to the corporation. If they want to close the S corp and begin filing a Schedule C, they wouldn't need to have an EIN necessarily.

Linda, EA

[Paris Girl]

SubS vs Sch C

If they are an LLC that elected to be taxed as a sub-chapter S, they can revoke that election. Then they can file a Partnership Return (if two members) or report on Schedule C (if a single member LLC). This is one reason I usually advise my clients to become an LLC rather than a corporation, then make the elections that get them to taxation as an SCorp.

[Gary2]

As for the name: If it's a real corporation (as opposed to an LLC taxed as a corporation), then the corporate name will be "Such-and-Such, Inc." (or Ltd. or some other indicator typically required by state law), while the unincorporated entity is prohibited from using the Inc. or Ltd., etc.

In any event, there may be tax consequences to dissolving the corporation (or electing partnership treatment if it's an LLC taxed as S-Corp), due to the transfer of assets.

[Gary2]

If they are an LLC that elected to be taxed as a sub-chapter S, they can revoke that election. Then they can file a Partnership Return (if two members) or report on Schedule C (if a single member LLC). This is one reason I usually advise my clients to become an LLC rather than a corporation, then make the elections that get them to taxation as an SCorp.

I'm not sure I'm following your reasoning. Are you saying that the mere flexibility for going back and forth between SCorp treatment and Partnership/Sch. C treatment is enough justification?

I'm not sure I see this benefit. I'd certainly encourage consulting with an attorney to review the liability issues, which could vary from state to state.

On the other hand, I do see the benefit of being able to get corporate tax treatment, S or C, - if that's the right tax treatment for the situation - without having to keep up with the formalities of annual meetings, minutes, and other such bureaucracy.