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…
- It can reduce your self-employment tax.
- You can avoid double taxation, because the business is no longer taxed on its profits.
- Owners may have some protection from liability.
- If, or when, you decide to sell the business, it will be easier to transfer ownership with the S corporation structure.
- Owners can be shareholders and draw a salary from the business.
- 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.