An LLC is a state chartered business entity not a tax status. An LLC can be a sole proprietorship, partnership or S-Corporation. There is no deadline for creating an LLC, because you are not changing the tax status. However, obviously if you want an LLC electing to treated as an S-Corp, you have to create the LLC first.
It is the election to be treated as a sub chapter S corporation that establishes either a corporation or LLC to be treated for tax purposes as an S-Corp. Normally, you should elect to be treated as an S-Corporation no more than two (2) months and fifteen (15) days after the start of the tax year. For calendar year corporations, that is March 15th (3/15)
. However, relief is routinely granted for late elections with reasonable cause. Just about any rational reason will suffice, including CPAs being busy.
The bigger question is why do you even think you need an LLC let alone an S-Corp. I feel confident that the majority LLCs created and/or S-Corps elected are; unnecessary, provide no real benefit and are often counter-productive:
- Will your primary employment's W-2 Box 3 SS wages + your potential S-Corp shareholder-employee's W-2 Box SS wages will be >= the SS maximum wage base (MWB) (2019 = $132,900)? Do NOT elect an S-Corp it will cost your MORE in FICA taxes than SE taxes you would pay as a sole proprietor.
- If this is your only source of earned income and your W-2 wages will be < the SS MWB or the above is not true, then an S-Corp may save you sufficient FICA taxes or SE taxes to make sense.
- If your W-2 Box 3 SS wages will be >= the SS MWB, are a specified service trade or business SSTB and your taxable income is <= the QBI range, your QBI deduction will probably be higher with a sole proprietorship and in most cases will more than offset the savings on the Medicare only portion left of FICA.
- If your W-2 Box 3 SS wages will be >= the SS MWB, you are not an SSTB, and your taxable income will be above the QBI range, is it almost mandatory that you elect to be an S-Corp. Otherwise, no W-2 wages, no QBI and no QBI deduction.
You need to keep in mind that an S-Corp shareholder-employee must pay themselves a "reasonable compensation". The IRA will be even more on the lookout for people reducing their compensation to increase their distributions, because an S-Corp's QBI is based on their distributions.
Also, if you are not an SSTB, and your taxable income will be above the QBI range, your QBI is limited to 50% of your W-2 wages. So such an S-Corp will want their W-2 wages >= 2X their distributions.
Bottom line. Don't be in a hurry, an S-Corp is no slam dunk and may even be counter-productive.