The Benefits of an S Corp
An S Corp is the correct choice.
Save money on taxes by setting up your small business as an S Corporation. While C Corporations may be required to pay taxes at both the corporate and individual levels, an S Corp avoids this double taxation. Business profits are also not subject to self-employment tax in an S Corp and business owners pay income taxes only on net business profits. S Corps also receive the crucial benefit of limited liability protection. Don’t put your assets on the line. Keep your business accounting separate and prevent a failed business from ruining your life. Not only will you get the perks of limited liability, but your shareholders will also.
Flow-Through Taxation
If you run a business with multiple shareholders, you’ll be thankful that you decided to set it up as an S Corp. S Corps abide by a process called flow-through taxation. Any profits allocated to your shareholders are taxed out to them on a personal level. You won’t have to worry about shelling out extra money in taxes related to your shareholders’ earnings so long as you don’t overstep your shareholder basis. It’s important to note that there are some strict rules regarding shareholders in an S Corp. Your company is limited to 100 direct shareholders or less, and they must be U.S. citizens or resident aliens.
Starting out on the Right Foot
The types of businesses particularly suited for an S Corp designation include small business startups, service providers, and consultants who anticipate earning large sums of money. Companies that don’t require significant start-up expenses are best as S Corps, along with those that do not have more than 100 shareholders. If your business grows over time, you can always submit new paperwork to change to a C Corp in the future. To learn more about setting up an S Corp and for assistance filing the right paperwork, contact our professionals.
If you have a current S Corp and need tax assistance for your 2019 return, remember the 1120S filing deadline is March 15th, so don’t delay.
Work with our Small Business Specialists
Running your own business isn’t easy, and it certainly takes time, determination, and lots of hard work, however with the right tools and knowledge, it can be a lot easier. Alron Corps, Inc., a subsidiary of Alron Enterprises, Inc. specializes in providing small businesses the highest quality expert assistance. Contact us today to get started! We look forwarding to hearing from you. Give us a call: 321-951-7626 or send us an email: [email protected]