The Advantages of an S Corporation

Mike Miller Small Business, TAX TIPS

Are you a small business owner? When you started your business, did you set it up as an LLC? Did you just get hit with a huge tax bill? It may be time to consider filing for an S Corporation. An S corp is not a business structure, but an election that is made with the IRS that offers a pass through tax to shareholders rather than the business paying corporate taxes. Here are a few reasons why it may be a good idea to apply for S Corporation tax treatment with the IRS…

  1. It can reduce your self-employment tax.
  2. You can avoid double taxation, because the business is no longer taxed on its profits.
  3. Owners may have some protection from liability.
  4. If, or when, you decide to sell the business, it will be easier to transfer ownership with the S corporation structure.
  5. Owners can be shareholders and draw a salary from the business.
  6. An S corporation protects personal assets of it’s shareholders.

We recommend speaking with your accountant or tax adviser to determine if an S corporation is right for you, as a small business owner.

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