Why this matters
A single-member LLC is generally disregarded for federal income tax unless it elects another classification. An eligible LLC can elect S corporation treatment, but an owner working in the business must address reasonable compensation. The election also brings a separate return and payroll administration.
Example
A profitable owner-operated LLC may consider an S election after modeling reasonable wages, remaining profit, tax savings and compliance costs. An early-stage business with uncertain profit may reach a different result.
What to review
Review eligibility, other owners, expected profits, payroll setup, Form 2553 timing and Georgia consequences before making an election.
Official source: www.irs.gov/businesses/small-businesses-self-employed/s-corporations