For your situation NOT having an S-Corp may not apply. Now you understand how tax beneficial the S-Corporation can be for highly profitable businesses. "īe sure to read the whole article. But S-Corporations profits are NOT subject to that nasty 15.3% Social Security and Medicare (also called Self-Employment) Tax. Not only are S-Corporations allowed to avoid a corporate tax and instead pass through the income, and therefore the tax, to the individual owners. Yuck! So as an aside unless you’re planning on bringing on more than 100 owners or you’re very concerned with protecting your personal assets, you shouldn’t need to consider a C-Corporation. A “regular” Corporation (or C-Corp) pays tax on its profits at the business level, and then when the owners take those profits out of the business, it’s treated as a dividend and taxed on the owner’s personal income tax return. "The allure of the S-Corporation is the avoidance of double-taxation. But trust me, if your accountant doesn’t understand STR then either get another or don’t get into it. I’m back to doing my own corporate now, and only have the accountant verify each year come tax time, but I still have my tax guy do the personal because it’s worth the money to not have to deal with it. ( some is related to his S corp income or loss flows to your personal taxes ). I will say I’ve been doing my corporate taxes for 3 decades one I added the STR to the mix it was a nightmare until I dumped my accountant and found ones that understood that business and fixed my books. I have an S corp because I had one already I wasn’t doing much with and all the paperwork was done. It’s making sure that first year of books is correct so you don’t take a tax bath. If your accountant doesn’t understand STR then find one that does. I’m also in NC and finding a good tax account that can get everything set up right is critical. I have to agree with spince and undecended.
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