I usually do individual returns. I have a new client that formed an LLC, then elected to be taxed as a corporation. I don't understand why he didn't just form a corporation to begin with. He said his lawyer said to do it that way. What advantage is there in doing it this way? Am I missing something?
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Llc
There are several differences between corporations and LLC's for tax purposes. LLC's are popular because they combine positive aspects of partnerships, such as pass-through taxation, with liability protection of corporations. For example, an LLC is not limited to one class of stock as with an S corporation. You can do special allocations with an LLC that would disqualify S status if you did it with an S corporation.
I don't know if the attorney was taking tax aspects into consideration, but it might be a good idea to check with the attorney so you can help the client acheive the goals.
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