Operating Your S Corp Recap
Posted November 23, 2018
This chapter about operating your S corporation focuses mainly on payroll, and the reasonable S Corp salary determination. Here is a brief recap of some of the key points-
- Having an S corporation is very similar to an LLC in terms of hassles and headaches. If you think having an LLC is not a big deal, having an S corporation will be the same. If you consider having an LLC to be a pain in the butt, having an S corporation isn’t going to make it easier.
- The savings can be huge. Most S Corps earning about $150,000 will see about $9,500 to $10,000 in savings. For kicks, please review Line 4 on Schedule 2 of your 2019 individual tax return and imagine reducing it by 60 to 65%.
- The break-even where an S Corp election makes sense is about $30,000 in net business income after expenses. This is determined by dividing the annual cost of our S Corp package ($2,940) by 8% to 10% in average savings.
Don’t forget to review our chapter on tax deductions and fringe benefits. Several business owners want to know which deductions they can and cannot take- we’ve included those lists in the chapter, but we’ve also listed a bunch of expenses that might become tax deductions if you position yourself carefully.
Taxpayer’s Comprehensive Guide to LLCs and S Corps : 2019 Edition
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