Forming an S corporation business or looking to incorporate a company can have some advantages at tax time. Members of an LLC are subject to employment tax on the total income of the business, however with S corporation income, only the wages of each shareholder who is an employee are subject to employment tax. Shareholders who also work for the company must pay themselves reasonable compensation.
The key difference between an S corporation and a C corporation is this that with an S Corp, your profits and losses can pass through to the personal tax returns of the company’s shareholders. As a result, only the shareholders are taxed, and not the business itself.
If you've picked up an S corporation form and are ready to apply, let InsideUp help you find corporate law services who can guide you through the process.
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