Thinking about designating your business as an S corp? Learning more about the ways that operating your business this way can help you keep more of your money when it’s time to file your taxes. Here are some things to consider about S corp tax planning before talking to an experienced accountant to make the most of your tax strategies.
The Value of Distributions Over Only Taking a Salary
With an S corp, some of the money that a company earns may be designated as distributions to the business owner as if they were a shareholder in the company. When this happens, it has the effect of reducing your income to what’s considered a “reasonable salary” and leaving you personally with a lower tax burden.
No Federal Corporate Income Tax
Because of the way an S corp is structured, there is no federal corporate income tax levied against the company. This only applies to federal taxes, though; states may (and several do) still tax an S corp just like a C corp, so your tax savings may vary.
Avoid Double Taxation
An S corp is what’s described as a pass-through entity, meaning that corporate gains and losses are “passed through” to the shareholders, with certain exceptions. That money is only taxed once, at the personal level, instead of at the corporate level and at the shareholders’ personal level.
Interested in More S Corp Tax Planning Benefits for Las Vegas Businesses?
S.J. Meyer & Co. serves clients with superior accounting and auditing, tax planning and preparation, and business set-up and planning services, as well as Quickbooks consulting. Our team of top-rated financial professionals has earned a stellar reputation for attentive service and dedication to our clients’ needs. We welcome your questions about wealth management, estate planning, business taxes, S corp tax planning and more. Contact us today for prompt and reliable assistance.
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Posted on May 31, 2022 | Published by Ignite Local | Related Local Business