Just Filed for an EIN for my LLC... should i file form 8832?

[Isaiah Williams]

so I just recently filed for my LLC and Ein. After I received my employee identification number, I was told that if I want to, I have the option of filing form 8832 "Entity Classification Election" and elect to be classified as an organization taxable as a corporation. It also states that if my LLC meets the qualifications for an S corporation I can file form 2553 "Election by a Small Business Corporation." If I don't file either one of these, than my LLC will be taxed as a default sole proprietorship. My question this: What is a file 8832 or file 2553? What exactly does it do to my LLC and what are the differences as far as taxes between a sole proprietorship, a corporation, and a small business corporation? I am really struggling trying to comprehend exactly what it all means, so any input or advice you have would be EXTREMELY appreciated. thanks in advance!!! By the way, not sure if this information helps,but I'm the only member in my LLC, and I do not currently own any properties or investments with it. I also am in Columbus Ohio.

[Jana Cain]

@Isaiah Williams There are a variety of pros and cons to each entity option, and what will make the most sense for your LLC will depend on your plans and goals. Buy-and-hold may warrant a different strategy than flipping. If you want to take on additional members down the line, that will also affect your decision. As an example, a big plus of not being a disregarded entity (e.g. not filing a Schedule C for your business) is generally not having to worry about self-employment taxes. However, partnerships, S-corps, and C corps require an additional tax filing, plus there are wage considerations that go along with the S-corp and C-corp designation, all of which you might not feel is worth the effort of managing.

My advice is to schedule time with a tax pro who (a) has expertise in business returns (not all of them do), and (b) does tax planning (not all of them do) and have them help you map out some scenarios to decide what structure will best fit your goals and strategy.