If you’re a small business owner, March 15th may feel like it’s approaching too quickly. Maybe you already have your financials ready, or need Insogna CPA to help with bookkeeping, but is either enough to ensure that your maximizing your 1120S taxes?
An S-Corporation (S-Corp) is a tax election made with the IRS that allows a sole proprietor or partnership to be taxed as an S-Corp. S-Corps elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Because of this, many often refer to them as a ‘pass-through’ entity.
There are a few other requirements:
If you are making a net profit (after expenses) of more than $30,000 per year, you should consider electing to be taxed as an S-Corp. Why? You’ll pay less taxes overall versus filing as a SchC and paying self-employment taxes on all of your net profits.
Now, obviously an S-Corp doesn’t make sense in every business situation, so Contact Us if you’re not sure and need a professional look at your potential tax savings strategy
One of the largest benefits to filing as an S-Corp is that you escape the “double tax” bind that many C-Corps face. If an S-Corp loses money, that loss typically offsets the shareholder’s individual taxable income on their IRS1040. This can be a significant tax savings. And what about an S-Corp owners “reasonable” salary? Want to know what “reasonable” is…? Contact Us to engage our specialized software to find out exactly what you should pay yourself.
Insogna CPA’s tax experts can help you determine whether making the S-Corp election makes sense or not, as well as ensure and identify exactly what you should be paying yourself to avoid over-paying payroll taxes.
Don’t pay more tax than you need too—our goal is to make sure you keep as much as you deserve and maximize your tax savings.