Many entrepreneurs get their business off the ground as a limited liability company (LLC).
This can make a lot of sense if you are the single owner of a company or if you only have a few partners. Operating as an LLC gives business owners flexibility.
From a tax perspective, an LLC couldn’t be better: The business’ income is treated as the income of the owners. That’s right—you don’t pay separate business taxes if your company is an LLC. Instead, the company passes taxable profits and deductible losses through to the owners, who are all considered partners by the friendly folks at the IRS.
Pretty straightforward, right?
But there may come a time when you need to convert your LLC to a C Corporation. There are a few indicators that you should think about converting to a C Corp.