An LLC has the flexibility to choose how it is taxed. This can include being taxed as a partnership/sole proprietorship, as an “S” Corporation, or as a “C” Corporation. If an LLC is formed and no special elections are made with the IRS, then by default that LLC is taxed as a partnership. If the LLC wants to be taxed as an “S” Corporation or a “C” Corporation, they must file the proper forms with the IRS no more than 2 months and 15 days after forming the LLC, or any time during the tax year preceding the tax year the election is to take effect.
One of the great things about an LLC is that you can change your tax structure to choose what best fits your business at that time. The election does need to be approved by all the Members of the LLC, and done prior to the beginning of the tax year the new election is to take effect. We strongly advise speaking with an attorney or a CPA to figure out which method of taxation is best for your LLC.