How To Lower Your Tax Bill With S-corp
Hi Costa, Although there is no one size fits all solution when it comes to choosing a business structure, S-corp remains the most popular form of business in this country. With S-Corp you enjoy a limited liability, which generally means the company, not the shareholders or investors will be held legally liable if something goes wrong. The main benefit of an S-Corp over self-employed form (LLC) is the tax savings on self-employment taxes (Social Security and Medicare). For each dollar of profit, it could mean as much as 14.13% in tax savings. In the example below a self-employed business owner making $150K / year can save $4,164 / year by paying $75K salary and $75K shareholder (owner) distributions from S-corp.
S-Corp owners can save additional payroll tax by having their S-Corp pay for their family health insurance coverage. Is an S-Corp the right choice for your business? It dependents... Mostly on your goals and circumstances: different forms of the business offer distinct advantages that can bring long term benefit to your business. It is not too late to convert your LLC into S-corp this year and realize these tax savings... Book your free consultation here Talk soon, Costa Shepin CPA