Welcome to our Entity Classification Election Filing Service
We are an independent document preparation and filing service. We work only for you, and only to improve your filing experience. Click on the questions below to learn more.
An Entity Classification Election is a filing submitted to the federal Internal Revenue Service (IRS) to tell them how to tax your business entity. For example, a single owner Limited Liability Company (LLC) may file to tell the IRS to tax them like a Sole Proprietorship. Or that same LLC may file to tell the IRS to tax them like a Corporation. Please note that the document preparation and filing service we offer for this election is only for newly-formed LLCs in particular.
Eligible Limited Liability Companies (LLCs), partnerships, sole proprietorships, and foreign entity types can make this election with the IRS. But the document preparation and filing service we offer for this election is only for newly-formed LLCs in particular.
The Limited Liability Company (LLC) entity type is flexible on how it can be taxed. It can be taxed like a Sole Proprietorship or Partnership (depending on if it has one owner or multiple), or it can be taxed like a Corporation. This election serves to tell the Internal Revenue Service which one of those options the LLC chooses.
If a Limited Liability Company (LLC) does not file an Entity Classification Election, the Internal Revenue Service (IRS) will assume that it wants to be taxed it like a Sole Proprietorship if it has one owner, or that it wants to be taxed like a Partnership if it has multiple owners. Many business owners however do not want to leave something as financially important as their federal taxation up to assumption, so they file the Entity Classification Election to specify their election to the IRS and have a paper record of it.
Most commonly, Disregarded Entity is the IRS's term for LLCs that have only one owner, and that elect to be taxed like a Sole Proprietorship.
But another more technical way to define it is as a registered business entity that is separate from its individual owner for liability purposes, and that is federally taxed through the individual owner's personal tax return, on Schedule C.
Member is the LLC term for owner. So a Single-Member LLC is has only one owner, and a Multi-Member LLC has two or more owners.
Election in this context means choice. So an Entity Classification Election is a business's choice of entity classification, which in turn determines how the IRS taxes them.
Entity Classification Elections are filed with the federal Internal Revenue Service (IRS). In particular, they are filed by mail with either the Cincinnati, Ohio office or the Ogden, Utah office, depending on the primary address of the business making the election.
The Limited Liability Company (LLC) entity type is flexible on how it can pay taxes to the federal government. It can pay taxes like a Sole Proprietorship, a Partnership, a Corporation, or even like an S-Corporation. With Sole Proprietorships, Partnerships, and S-Corporations, business income is taxes as the personal income of the owners. With a Corporation, the Corporation itself pays taxes on its income, and additionally, the owners are taxed on income they take from the Corporation. The Entity Classification Election is the filing an LLC makes to tell the IRS how it wishes to be taxed.
Double taxation refers to the process by which a typical for-profit Corporation (or an LLC electing to be taxed like a Corporation) pays federal corporate income tax. Because in addition to the business paying income tax, its owners also pay federal income tax on the income they take from the Corporation (or from the LLC electing to be taxed like a Corporation).
Pass-through taxation refers to the taxation of business entities like S-Corporations, many LLCs, General Partnerships, and Sole Proprietorships, whereby the business pays no income tax. Instead all income passes through the business to its owners, and the owners pay taxes on it.
Yes, for taxation reasons too complicated to explain here, an LLC may sometimes decide that it desires to be taxed by the IRS like an S-Corporation. To do so, it can file an S-Corporation Election, and it may also need to file an Entity Classification Election.
The name of the LLC should be entered exactly as it is on the LLC's Articles of Formation of equivalent formation documents filed with the state. In general, it must contain an appropriate LLC-type indicator such as LLC, Limited, or Limited Liability Company. And it cannot contain an indicator for a different business entity type such as Inc. or Corp.
First, complete our simple one-page online application. Then provide payment for our service on the secure checkout page. We immediately prepare your IRS Form 8832 documents and provide them for your signature. Upon receipt of the required signature, we fax your signed forms to the IRS, usually within one business day. We then send you an e-mail confirming that we have done so and that concludes our service on the order.
Then within 60 days, the IRS will send you a postal mail informing you of the acceptance of your election and when it will take effect.
Or, if the mail from the IRS indicates non-acceptance of your election, you can amend your IRS form 8832 as necessary and resubmit it to the IRS. For help, feel free to contact us.
If it has been more than 60 days since your election was submitted and you still have not received an IRS notice of acceptance or non-acceptance, you can follow up with the IRS by calling 800-829-0115.
Within 60 days of an Entity Classification Election filing to the IRS, the IRS should mail you a notice of acceptance or non-acceptance. If they indicate non-acceptance, they will usually also indicate why, and it could be for any number of reasons.
You may have not yet completed your LLC formation filing at the state level, which is a separate, pre-requisite filing. You may have failed to provide some required information. Or you may have accidentally have mis-typed some information.
In most circumstances, corrections are possible. Simply amend your IRS form 8832 as necessary and resubmit it to the IRS. For help, feel free to contact us.
Yes. LLC Formation must be completed with the state prior to the filing of an Entity Classification Election for that LLC with the IRS. These are all filings that SimpleFilings can assist with upon request.
Yes. The Entity Classification Election application requires a Federal Tax ID, also known as an Employer Identification Number. The Federal Tax ID must be specifically for the LLC that is applying. If you do not already have Federal Tax ID, SimpleFilings can assist you in filing for one upon request.
After providing all required signatures, we will submit your election to the IRS often within one same business day, and send you an e-mail confirming that we have done so. Then within 60 days, the IRS will send you a postal mail informing you of the acceptance or non-acceptance of your election and when it will take effect.
If it has been more than 60 days since your election was submitted and you still have not received an IRS notice of acceptance or non-acceptance, you can follow up with the IRS by calling 800-829-0115.
No, it is the same turnaround time for everyone. We are usually able to submit your election to the IRS within one business day of receiving all required signatures, and the IRS should mail you a notice of acceptance or non-acceptance within 60 days of that.
Once an Entity Classification Election is accepted by the IRS, it stays in effect until it is changed, terminated, or revoked.
We are experienced at the document preparation and filing process for Entity Classification Elections. We turn what can be an otherwise complicated and confusing filing into a smooth and simple experience. During the process you can view your order status online or utilize e-mail or phone support to be updated as often as you like for no extra charge. And ultimately, we get you back to focusing on your core business faster.
Please visit our Fee Calculator to view the flat fee for our document preparation and filing service for the Entity Classification Election filing service.
SimpleFilings makes it easy to file your Entity Classification Election. Simply submit the application to get started.
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SimpleFilings is a fast and secure solution for several of the most common new business filings, like LLC Formation or Incorporation, DBA Registration, and obtaining your Federal Tax ID. But there may be other filings for you to perform both before and after starting your business. As a courtesy, we've listed some below:
• Internal administration - LLCs require fewer administrative formalities than Corporations, but both require some. For example, LLCs must write and keep a document called an Operating Agreement which outlines basic ownership and management information. Many books have been written on the subject of LLC and Corporation administration, and they often include useful document templates. Find them at your library or bookstore.
• Federal government filings - The IRS needs to know how to tax your new business. Filing forms such as IRS 8832, IRS 2553, and IRS 1023 can accomplish this. Other IRS filings, and filings with other Federal government agencies may be required as well. Local tax professionals can be good sources of information on this.
• State government filings - Each state you do business in will have filing requirements such as state tax ID numbers, state tax returns, foreign business entity registration (if it is not the state you formed your LLC or Incorporated in), and annual business entity reports. Offices in each state such as the Secretary of State and Department of Revenue can help you determine which ones apply to your business. Also, remember that some states that offer S-Corporation taxation require separate S-Corporation election filings at the state level.
• Local government filings - Each local jurisdiction you do business in may have filing requirements such as licenses, permits, etc. Offices in each jurisdiction such as the County Courthouse and City Hall can help you determine which ones apply to your business.
• Insurance and trade requirements - Depending on the nature of your business, other non-government filings such as obtaining insurance may be necessary to comply with all applicable laws. Consult your insurance agent and applicable trade association.
Starting and running a business is a richly rewarding but never-ending process, and the responsibility for research and compliance is solely yours. But remember that the profits are solely yours as well.