S Corp Membership in an LLC/C Corp


R

Robby

I have had an S Corporation (of which I am the sole member)
for a few years. Through this corporation I receive payment
(in the form of a fair salary and distributions) for
consulting work I do. I have a SEP IRA through this company
as well and make contributions based on my salary.

I will be setting up a company with a business partner of
mine soon to do consulting services. I will be a 50% owner
of this company. Most of the money I earn from performing
these services will be paid to this company instead of
directly to the one I already I have. I was wondering if I
could set up this new company as a C Corp or LLC and make my
existing S Corp a member, instead of myself. The S Corp will
get paid my share of the income, and I can take my payroll
through the S Corp. That way I only need one SEP plan and
one payroll setup, and can continue to work within my S
Corporation's tax structure. Are there any tax disadvantages
to this, and is this generally an accepted method of
structuring a business relationship?

Thanks,

Robby
 
Last edited by a moderator:
Ad

Advertisements

K

Katie

Robby said:
I have had an S Corporation (of which I am the sole member)
for a few years. Through this corporation I receive payment
(in the form of a fair salary and distributions) for
consulting work I do. I have a SEP IRA through this company
as well and make contributions based on my salary.

I will be setting up a company with a business partner of
mine soon to do consulting services. I will be a 50% owner
of this company. Most of the money I earn from performing
these services will be paid to this company instead of
directly to the one I already I have. I was wondering if I
could set up this new company as a C Corp or LLC and make my
existing S Corp a member, instead of myself. The S Corp will
get paid my share of the income, and I can take my payroll
through the S Corp. That way I only need one SEP plan and
one payroll setup, and can continue to work within my S
Corporation's tax structure. Are there any tax disadvantages
to this, and is this generally an accepted method of
structuring a business relationship?
An S corporation can be a member of an LLC. You should
discuss your plans with a qualified legal and tax adviser in
your local area to whom you provide all the relevant
detailed information, but in general, it sounds feasible.

Katie in San Diego
 
Last edited by a moderator:

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

USA C Corp income treatment 2
USA Defaulted to C corp remedies 1
USA S corp shareholder basis calculation 0
USA S corp shareholder basis 0
C Corp v S Corp v LLC 3
LLC & S Corp 5
USA 2% S Corp owner health insurance deduction 3
USA S Corp becoming C Corp 0

Top