Forming an LLC S-corp in Utah

If you want to form a Utah LLC and be taxed as an S-corp, you’ll have to file paperwork with the state, as well as with the IRS. Here’s what to know:

What is an LLC S-corp?

An LLC S-corp is a limited liability company that chooses to be taxed as an S corporation. S-corp is a tax status that combines aspects of partnerships and corporations:

• Pass-through taxation – LLCs are taxed as partnerships by default, which means their business taxes flow through the company to LLC members who then report business taxes on their personal tax returns—this is known as pass-through taxation. LLCs that file as S-corps retain pass-through taxation, which allows them to avoid the double-taxation of the corporate structure.

• Distributions – Filing taxes as an S-corp allows LLCs to make some payments as distributions, which aren’t subject to employment tax. Distributions are one benefit of the corporate structure that S-corps are also able to take advantage of.

For more on S-corps, see Northwest’s page: What is an S-corp?

How do I form an LLC S-corp in Utah?

Creating an LLC S-corp in Utah requires two main steps:

• Form a Utah LLC – This generally means designating a Utah Registered Agent, filing an LLC Certificate of Organization, and adopting an LLC Operating Agreement. Though you may also need to take additional steps, like obtaining an EIN and a bank account for your business. You can read more about the process of LLC business formation on Northwest’s Utah LLC page.

• File Form 2553 – Any qualifying business entity (whether an LLC or a corporation) wishing to file taxes as an S-corp must file IRS Form 2553.

When do I file IRS Form 2553?

Businesses may apply for S-corp status anytime during the taxable year, or up to two months and 15 days after the first day of the year taxes are to be filed. (In other words, before Feb. 15, 2022 for your 2021 tax return.) If you miss the tax deadline for filing for S-corp status, you may file for Late S-corp Election Relief.

Do I have to file Form 8832 along with Form 2553?

No. This is a common misconception, since IRS Form 8832 – Entity Classification Election allows certain entities to choose to be taxed as a corporation, a partnership or a disregarded entity. However, if you’re choosing to be taxed as an S-corp, you will only have to file Form 2553.