360 Tax & Business Solutions LLC · Reviewed September 30, 2026
Distinguish the entity from its tax treatment
An LLC is formed under state law. Federal tax treatment depends on ownership and elections; an LLC is not automatically an S corporation. Thinking of these as two related decisions helps avoid confusion when reviewing formation papers and tax returns. Start by identifying the current entity, owners and any elections already made.
Begin with how the business will work
Write down who owns the business, what it does and where it will operate. Discuss expected activity and administrative capacity rather than choosing a structure based only on someone else’s experience. A useful review includes how records will be maintained, how owners will be paid and which professional questions need to be resolved.
Review elections and ongoing duties
S corporation treatment has eligibility and election requirements. It should be evaluated alongside the work required to operate and report correctly. Before moving ahead, confirm who will handle accounting, filings and other applicable responsibilities. Establish a document folder with formation records, tax elections and agency correspondence so later decisions can be based on the actual history.
Build a coordinated starting plan
A clear startup plan identifies the chosen structure, needed registrations and unresolved issues. Assign responsibility and timing to each item. If legal agreements or liability questions need specialized advice, involve your attorney. Tax efficiency is relevant, but it should be assessed together with ownership, operations, costs and the business owner’s ability to maintain the structure.