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Painting Business Owners: Set Up Your LLC Before January 1st—Here's Why! #ProfitablePainter

Name: Painting Business Owners: Set Up Your LLC Before January 1st—Here's Why! #ProfitablePainter
Uploaded: 2024-12-09T14:15:02+00:00
Duration: 42 s
Channel: Daniel Honan
Description: In this concise advisory segment, the presenter urges painting‑business owners who have not yet formed a limited liability company (LLC) to create the…

9 Dec 2024 · 1 min

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In this concise advisory segment, the presenter urges painting‑business owners who have not yet formed a limited liability company (LLC) to create the entity before the start of the new calendar year. The primary reason is to preserve the option of making a late S‑corporation election for the 2025 tax year; such an election is only possible if an LLC already exists. The speaker notes that LLC formation is generally inexpensive, with the notable exception of California where the annual fee is about $800. Even if the owner never uses the S‑corp election, having the LLC “in the back pocket” provides flexibility to elect S‑corp status later when appropriate. The presenter cautions against waiting until year‑end to form the LLC, because lacking the entity at that point would force the owner to postpone the election until the following year.

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if you are just starting your business, maybe you don't have an LLC formed yet, get that LLC established before January 1st because if the business grows in 2025 and you want to do an S-corp election, you can do a late S-corp election, but only if the LLC is already established. So LLCs are cheap unless you live in California, then they're about $800 a year. But go ahead and get that established. If you don't use the S corp election, that's fine. You've got the LLC in your back pocket. You can pull it out and do the election whenever it's appropriate. But you don't want to get towards the end of the year, want to do an S corp election and then not have the entity in place, 'cause then you will have to wait until the following year.