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Another Option, Dormant S Corp
By Jason Watson, CPA
Posted Tuesday, October 31, 2023 (boo!)
Not sure if you want to have a full-blown S Corporation? Break-even analysis is based on our annual fee of $4,320. If an S corporation saves you 8% to 10% (on average) in taxes over the garden-variety LLC, then $4,320 divided by 9% equals $48,000 of net ordinary business income after expenses and deductions.
Let’s say you are teetering on that income figure, and not sure about running payroll and all that jazz. You could still run your business income and expenses through your tax return as a sole proprietor or another single-member LLC, and take the small self-employment tax hit. Then simply file a No Activity tax return for your S Corp (this assumes you already filed an S corporation election, and now regret the cost of running payroll or some other expense).
Conversely, if you break-even on the fees as compared to your savings, keep in mind the additional benefits. With our Business Advisory Service packages, you are getting individual tax return preparation plus routine tax planning and consultation. There is value there; so if you break-even in terms of cost-benefit analysis, you might actually be ahead with the value received. We’d like to think so (of course we would, right, we’re the one collecting the check).
Taxpayer's Comprehensive Guide to LLCs and S Corps 2023-2024 Edition
This KB article is an excerpt from our 400+ page book (some picture pages, but no scatch and sniff) which is available in paperback from Amazon, as an eBook for Kindle and as a PDF from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles online, click on the fancy buttons below or visit our webpage which provides more information at-