Is it time for your small business to elect an S Corp filing?
Several factors go into the decision-making process when picking an entity for a small business. The entity formation needs to be a fit for the business’ tax and legal purposes. Generally, many new entrepreneurs choose to incorporate as a sole proprietorship. This default entity formation is often the easiest to file. There is little paperwork and affordable filing fees that encourage entrepreneurs to initially form a sole proprietorship.
However, a sole proprietorship is also heavy on taxes. Unlike an S Corporation, which allows income, deductions, credits, and losses to pass-through to business owners, sole proprietors are responsible for all taxable activity. Sole proprietors must report all income on tax returns, including self-employment tax and tax on all business profits.
Essentially, this means a sole proprietor pays personal and business tax on their income. If you incorporate as a sole proprietor, you may be reeling at the tax amount that you must pay.
Luckily, there is way to start lowering your tax bill now. MyCorporation’s S Corporation Tax Calculator makes a visible difference for the bottom line of your taxes. Here’s how it works and how an S Corp filing can benefit your small business.
Start lowering your tax bill with the help of MyCorporation’s S Corporation Tax Calculator. In just a few, quick steps you’ll discover tax savings available with an S Corp filing.
As you enter in the numbers, you’ll see immediate savings.
Let’s say the estimate annual net income of your small business in $70,500. You decide to pay yourself a reasonable salary of $47,500.
If you remain a sole proprietor, you will need to pay $9,961 in self-employment taxes. That’s a tax payment of almost $10,000! However, if you elect an S Corp you will pay $7,268. That’s $2,694 in tax savings by opting for a S Corp filing.
You were able to use MyCorporation’s S Corporation Tax Calculator and explore tax savings. What other financial savings can small businesses receive from an S Corp filing? Let’s take a look at other opportunities where S Corps help save money.
Before we move on to share how to start an S Corp filing, it’s important to determine if your small business is eligible. Here are a few eligibility guidelines for S Corporations.
Did our S Corporation Tax Calculator tool encourage you to elect an S Corporation?
In conclusion, it may be time to review your business status. Choosing an S Corp filing may be financially advantageous to your business. Above all, an S Corporation helps small businesses save money on taxes and receive additional financial benefits.
MyCorporation’s team of professionals can help you start an S Corp filing today. Contact us at mycorporation.com or call us at 1-877-692-6772.
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