S-Corp: Is it time to make the leap?
As a small business owner, you have a number of choices when it comes to how you structure your business for tax purposes. One option that you may want to consider is being taxed as an S-Corporation. Here are three key benefits to electing this tax status:
Lower Self-Employment Taxes: As an S-Corporation, you can choose to pay yourself a reasonable salary and pay the remaining profits to yourself in the form of distributions, which are not subject to self-employment taxes. This can result in significant tax savings for you as a business owner.
Flexibility in Allocating Income: An S-Corporation allows you to allocate income in a way that makes sense for your business and your personal financial situation. For example, you can choose to allocate more of your income to distributions and less to salary if you want to reduce your self-employment taxes.
Pass-Through Taxation: S-Corporations are considered pass-through entities, which means that the company's income is only taxed at the individual level and not at the corporate level. This can result in lower overall tax liability for your business, as well as a simpler tax filing process.
Being taxed as an S-Corporation can provide small business owners with valuable tax savings, flexible income allocation options, and simpler tax filing. If you're considering your entity type, we can help! There are several factors we use to help you decide if its time to make the leap. We are happy to calculate an analysis to see which entity type will help you save the most on taxes. Contact Laura today at kaura@walkerbookkeeping.online