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Experts Weigh In: What Are Your Predictions for 2016?

We’re a couple weeks into 2016, and we’re already starting to see some trends form. In our industry specifically, we’ve been noticing the following:

1.We are seeing a growth in small business s-corporation elections to minimize the risk of audit and put owners of the business on payroll to save on potential employment taxes. This is a trend because as small businesses incur more expenses (increasing minimum wages in many states, health care costs and the cost of employees), they are looking for ways to save on taxes.  Business owners who put themselves on form an s-corporation and put themselves on payroll are able to save on self-employment taxes because they only pay self-employment taxes on the salaried portion of their income (as long as the salary is reasonable) and not on the remainder of the income.  (more…)

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How Your Business Structure Can Impact Your Business Taxes

There’s nothing simple about starting and owning a business. Choices are everywhere — in business plans, company names, pricing, employees, benefits and office space. But first, in order to register your company with state and federal agencies, you’ll need to choose a business structure, and this choice can have ramifications that are not immediately clear.

A business’s structure is basically the way it’s organized. It answers questions like who’s in charge, how profits will be distributed and whether owners are responsible for debts accrued by the business. The most common IRS-recognized business structures include the following: (more…)

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Business Basics: Reasonable Compensation

This week we are looking at reasonable compensation, a legal necessity for anyone running a Corporation. Reasonable compensation is connected to one of the most fundamental parts of working for a company – getting paid – and yet it’s so widely misunderstood. When you form an Corporation, you create a separate, legal entity that ‘earns’ money. You then pull your wage from those earnings and pay whatever payroll taxes you owe. reasonable compensation

In order to close a loophole wherein those running the corporation could ask for an extremely low salary, pay next to no payroll taxes, and then close the wage gap with distributions, the IRS requires that all corporate officers and executive be paid ‘reasonable compensation.’ But what constitutes reasonable compensation is a little more murky.

Who needs to be concerned with reasonable compensation?

Anyone that is runs, or helps run, a C-Corporation or S-Corporation must be reasonably compensated for their work. (more…)

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Business Basics: S-Corporations

Incorporation is one of our specialties, and many of our clients come to us because they want to incorporate their business. After all, incorporation helps protect you in the event of a lawsuit, and forming a separate business entity helps separate the company’s debts from your private assets. However, our customers also often ask us about a real caveat to incorporation – double taxation. After you incorporate, your business has to pay a tax on any income that it earns, subject to the federal and state corporate income tax rates. On top of that, you still have to pay tax on income you earn from working for the corporation. Effectively, this taxes the same amount of income twice, and that heavy burden frightens many small business owners, most of whom don’t have much extra capital to throw around. There is, happily, a way to avoid double taxation, and it is the subject of our Business Basics post for this week – filing for S-Corporation status.

S-Corporation

Chapter 1, Subchapter S of the Internal Revenue Code allows smaller businesses to avoid paying federal, and usually state, corporate income tax. S-Corporations are the most popular type of corporation in the United States, with 61.9% of all active corporations filing Form 1120S to apply for S-Corp status.

In order to qualify, your corporation must have fewer than 100 shareholders and issue only one class of stock. If your corporation qualifies, you can file for S-Corp status, which will allow any income earned by the corporation to pass through the business, untaxed, directly to the shareholders. You, of course, still have to pay your personal income taxes, and by law must take a reasonable compensation as a wage. But your corporate income, in most cases, will stay untouched.

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B Corp Experts Weigh In: Senen Garcia

Senen Garcia, Esq. of SG Law Group

Accountant, attorney, and B Corp movement supporter Senen Garcia, Esq. got his entrepreneurial start at an early age. The sole owner of two businesses before completing his bachelor’s degree in Business Administration with a concentration in Entrepreneurship and International Business, Garcia opened his accounting and tax practice before receiving his undergraduate degree. While running said business, he completed his Graduate and Juris Doctorate degrees and now operates SG Law Group in Florida which assists clients with their corporate, real estate, estate planning an property insurance claim needs.

Today he’s giving us a look at how he got interested in the B Corp movement, what he believes Benefit Corporations need in order to succeed and why the real benefit behind the B Corps has a lot to do with marketing.

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Experts Weigh In: Forming LLCs vs. Corporations

llcs vs corporationsOne of the first decisions every business owner needs to make is what entity to file their business as, and that choice is typically between LLCs vs. Corporations. Really the decision comes down to what fits the needs of the business owner and the business, but there is still discussion on which entity is best. Here at MyCorp, we gathered together a panel of professionals to get their expert advice on LLCs vs. Corporations and which is the best to form for your business. Which side are you on?

1. “Generally speaking, corporate status is preferable. Banks typically don’t view LLCs as favorably during the loan application process and corporations don’t pay taxes on fringe benefits. These include group-term life insurance, medical reimbursement plans, medical insurance premiums, and more.”

– John Boyd, Principal, The Boyd Company, Inc.

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50 States of Incorporation: Connecticut

Connecticut is a state with a long and storied history. European colonists established what would eventually be Connecticut back in 1636, and towns sprung up on the banks of the Connecticut river, leading it to be called the River Colony. Largely due to a war with the Pequot people that inhabited the area, these river towns created a central government to pool resources and raise a militia. After the Pequot War the population swelled, and Connecticut received its royal charter in 1662.

Both it’s involvement in early American history and its natural beauty ensure Connecticut remains a top tourist destination – state officials estimate that tourism generates around $14 billion for the state economy. Well in line with its revolutionary history, Connecticut is also home to many of America’s major gun manufacturers, including Colt, Stag, and Mossberg.

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S Corporations: How They are Structured and Taxed

By Greg Lindberg, 1800Accountant.com Writer

Decision-making is a huge part of being an entrepreneur and, eventually, a start-up business owner. One of the decisions you have to make during this often challenging process is to settle on a specific business entity to operate. An S corporation is one option you can go with. 1800Accountant.com, a partner of MyCorporation, recommends understanding the following information about how S corporations are structured and taxed before choosing to set one up.

The term “S corporation” originally took on its name from Subchapter S of Chapter 1 in the federal Internal Revenue Code. In general, an S corporation does not pay federal income taxes at the corporate level. However, this does not mean it is exempt from paying taxes altogether. The difference with this type of business entity is that it elects to have its profits, losses, deductions, credit, and all other activities passed through to the shareholders who are invested in the company. These shareholders must report this financial activity on their personal income tax returns.
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