LLC-taxed-as-C-corp vs C-corp

[ausjke18]

What's the real difference? I have a LLC and now want to be taxed as C-Corp, not sure if I should stick to the LLC(while elect C-corp for tax purposes) or change it to C-Corp fully?

[Evan]

There could be some state tax implications. Not really anything from federal tax purposes, other than just the conversion. LLC has less formalities for legal purposes -- no annual meetings required, etc. that corporations are required to have, or else you could pierce the corporate veil.

Some states recognize LLC's as pass-through and therefore there is no tax return expected, but what they do is increase the fee of your annual report so you may pay a higher rate there than a corporation. But if you were a corporation you could have a low fee and perhaps a minimum business tax paid. If you do the LLC as a C-Corp (or even S-Corp) you could wind up with both. Massachusetts is one of those states, and I'm sure there are others.

Most folks don't prefer the C-Corp due to the double taxation, but depending on your income, you could pay lower taxes as a C-Corp.