Why would an LLC company wish to be taxed as a C corporation?

There are a number of reason that an LLC owner would wished to be taxed as an C or as S Corporation. However, there are 5 primary reasons that the LLC owner should consider as being very important and these are as follows;

1.Self-employment Savings.
In the current tax environment, there is some scope for self employment tax savings especially in the S Corporation where is an opportunity of having some pass thru income that can potentially escape self employment taxes, assuming the owners take a reasonable salary.

2.Fringe benefit plans generally are deductible.
In the case of the C Corporation, these fringe benefits not be subject to inclusion in salary for the 2% Shareholders as required for an S Corporation or be considered as a Guaranteed Salary for an LLC Entity. Thus, the extent of the potential fringe benefits would be an important factor in deciding to choose the tax treatment as a C Corporation.

3.Dividends are taxed at a lower tax rate.
The shareholders can take advantage of the lower dividend tax rate on any distributions made from the C Company. These would be taxed at much lower tax rate than that of any pass thru income reported on the LLC’s or an S Corporations K-1, that would be subject to the individual shareholders marginal tax rate.

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