Tax Guru – Ker$tetter Letter

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Changing From C to S Corp

Posted by taxguru on August 12, 2007

Q:

Hello, Mr. Kerstetter,
I came across your website today. I was wondering if you can answer me a quick question:
Our fiscal year is April 1st to March 31st. What would be the time frame that we can change to an S corp?
Appreciate your help!

A:

You need to do some more research and work directly with an experienced professional tax advisor before you take the step of converting to an S corp. 

As I have explained several times on both my blog and website, one of the biggest pitfalls to converting from a C corp to an S is the fact that you will also have to convert your fiscal year to a calendar year, which will force you to lose all of the benefits of having a different fiscal year. 

You may find that retaining your current C corp and starting a new S corp will give you the best of both worlds.  A good professional tax advisor should be able to explain how using two corps can work in your best interest.

I don’t know how much of my website you have looked at, but here are some key pages you should study before consulting with a professional tax advisor:

Comparing S and C corps
   <a href="http://taxguru.org/corps/scorp.htm&quot;

Benefits of Different Fiscal Years
   <a href="http://taxguru.org/corps/taxyear.htm&quot;

S Election Instructions From IRS 


Good luck.  I hope this helps.

Kerry Kerstetter

 

 

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