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CPA In Houston Answers: Can an S Corp Own an LLC?

Evans Sternau CPA is a CPA in Houston and provides tax planning and tax advisory services to help you answer the question: can an S Corp own an LLC?

As a CPA in Houston, a common question we get from clients is “Can an S Corp Own an LLC?” The short answer is yes, an S Corp can own an LLC.

What is an S corporation?

S corporations are pass-through corporations that elect to pass-through the income and losses to their owners. S corporations are generally (certain exceptions apply) not subject to federal income tax. Rather, the income and losses are reported on their owner’s personal tax returns and the tax is paid by the owners.

Who can own an S Corporation?

In order to qualify for S Corporation status, certain requirements must be met. The corporation must be a domestic corporation, it must be owned by only individuals and some trusts and estates. A partnership, corporation, or non-resident alien is not allowed to own an S corporation. The corporation must also have less than 100 owners and must only have one class of stock. In addition, certain industries and types of companies are not qualified to be an S Corporation.

Can an S Corp Own an LLC answer from a CPA in Houston

What is an LLC?

An LLC, or Limited Liability Company, is a business structure that is allowed by state statute. If you are interested in establishing an LLC it is generally best to work with a qualified attorney. Owners of an LLC are referred to as members. There are generally no restrictions on the amount or type of owners of an LLC.

How is an LLC taxed?

The tax classification of an LLC depends on the number of owners and elections made by the LLC. An LLC can either be taxed as corporation, partnership, a disregarded entity, or an S corporation.

How is an LLC taxed?

The taxation and tax filing requirements of an LLC that is owned by an S corporation depends on how the LLC is structured.


If the LLC has more than one member and did not elect to be taxed as a corporation, the LLC will be a partnership and will file a partnership tax return and will issue a Schedule K-1 to the S corporation.


If the only member of an LLC is the S corporation, the LLC will be considered a disregarded entity, and typically no separate tax filing is required. The income and expenses of the LLC will reported directly on the tax return filed by the S corporation.

Chris Sternau - a CFP and CPA in Houston, TX

About the Author

Christopher Sternau, CFP®, CPA 

Partner – Evans Sternau CPA LLC 

CSternau@ES.CPA 

832-482-4240

Christopher Sternau is a Certified Public Accountant and Certified Financial Planner with over a decade of experience providing comprehensive tax and financial planning services to several of the wealthiest families in the United States. He focuses his practice on complex individual and closely held business tax planning and preparation. His clients have business interests in a wide range of industries including oil and gas, mining, real estate, cattle ranching, retail, technology and many others. 

Chris is the founding member of Evans Sternau CPA LLC. Prior to founding Evans Sternau CPA LLC, Chris led the tax department for a family office in Houston, Texas. He also spent several years as a Tax Manager at Andersen. 

ABOUT EVANS STERNAU CPA LLC

Evans Sternau CPA is seeking reform in an industry where responsiveness and availability are the exceptions – not the norm.

Our global network of committed CPAs and accountants places proactive thinking at the forefront of our work. With robust service offerings and client support strategies, we are always searching for opportunities to serve your best interests.

While our philosophy is rooted in tried and trusted methods, our execution surpasses the norm and redefines the standard.

Evans Sternau CPA provides proactive tax, accounting, and advisory services for business owners, entrepreneurs and individuals with complex tax challenges. Evans Sternau CPA is for those that want year round support, not just during tax season.

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    • About Us
    • Locations
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      • The Woodlands
      • Corpus Christi
  • Services
    • Services Overview
    • Tax Advisory & Preparation
    • Accounting & Compliance
    • Outsourced CFO
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