S Corp Hard Money Facts, Net Savings

By Jason Watson, CPA
Posted February 22, 2020

Sales pitch alert! WCG specializes in small businesses which have a small number of owners, and often just a one-person show. Did you know that 95% of all S Corps have only one shareholder, and 99% of all S Corps have three or fewer shareholders?

Common S Corp candidates and current clients for WCG are consultants, financial advisors, physicians, chiropractors, doctors, surgeons, anesthesiologists, nurse anesthetists, insurance agents, photographers (the profitable ones), online retailers, FBA retailers, among several others. We also have several medical groups and financial advisor teams.

The tax savings of an S corporation is not in dispute. But what does it cost to have tax preparation, payroll and consultation done? Because small businesses are a core competency for us, we have created Business Advisory Services packages that includes the following-

Couple of things to keep in mind- we make very little profits on payroll processing… we offer it as a convenience to our clients. One throat to choke with a single call can be reassuring but if you want to run your payroll, go for it! And… the benefit of WCG preparing both tax returns is that we slide things around depending on income limitations, phaseouts, alternative minimum tax (AMT), etc. Having our arms around both can yield great tax planning and some excellent tax savings!

Some more things to consider- when a partial year remains, our usual annual fee is pro-rated to not charge you for services you didn’t use (like payroll and consultation). However, a large chunk of our annual fee is tax preparation which is typically a fixed amount of $1,300 (both corporate and personal). Whether we onboard you in January, July or December, we have to prepare a full-year tax return. This increases the monthly fee for the remaining months of the year but the monthly fee will later decrease in January of the following year to reflect the amounts above.

Break-even analysis is based on our annual fee of $2,940. If an S corporation saves you 8% to 10% (on average) in taxes over the garden-variety LLC, then $2,940 divided by 9% equals $32,667 of net business income after expenses.

You can always find someone to do it for less- we know that. At the same time, we have a vested interest in your success and provide sound tax and business consultation as a part of our service. Here is a link to our Periodic Business Review agenda that we cover throughout the year so our consultation to you is comprehensive-

wcginc.com/PBR

We also have written a webpage on end of year tax planning-

wcginc.com/EOY

And, to see our entire fee structure (transparency)-

wcginc.com/fee

Jason Watson, CPA, is the Managing Partner of WCG, Inc., a progressive Colorado Springs tax and consultation firm.

Taxpayer’s Comprehensive Guide to LLCs and S Corps : 2020 Edition
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Taxpayer’s Comprehensive Guide to LLCs and S Corps