Converting your business to a S Corporation
Do you need health insurance as a small business owner? Do you want your business to match your 401k contributions? Are you ready to take your business to the next level? If so, an S-Corp conversion may be a strategic move for you.
On average businesses making over $30,000 can save over $10,000 in taxes after converting. Converting your business from a Limited Liability Company to an S-Corporation allows you to be able to take advantage of a variety of benefits such as EIC, 401k contributions, and tax credits when filing returns.
S-CORP INFORMATION
-
An S-Corporation is a separate legal entity from its owners (shareholders). This separation means that the corporation itself is responsible for its own debts and liabilities, rather than the individual shareholders
-
This is a tax filing status only and does not affect SOC filing and does not affect tax liability
-
S-Corp owners who work for the corporation may receive both salary on W-2 and distributions. The salary portion is subject to employment taxes, but the distribution portion is not, which can result in tax savings.
-
The net income or loss of the S-Corp "flows through" to the shareholders' personal tax returns. Shareholders who work for the S-Corp typically receive W-2 wages for their services.
Benefits of Converting to a S-corporation
-
Ability to receive Earned Income Credit (EIC) through utilization of payroll- can be up to $6,600 w/ dependents
-
Contribute to personal 401k with employer matching - which counts as a business expense.
-
Dollar for Dollar tax credits are available to S-Corp entities.
-
In most cases, the state tax liability of the S-Corp does not directly flow through to increase the personal state tax liability of the shareholders.
More Benefits....
-
Health insurance premium for yourself and family are a business expenses versus a reduction to income after conversion from LLC to S-Corp
-
Section 127 - Student reimbursements up to $5,200 college tuition.
What Our Clients Say
Leia Caston, Delta Airlines Manager
"I love Simone and her team my experience with Clarke CPA’s Advisors was best in class. Not only does she prepare your taxes she provides a level of education to ensure you are compliant with the tax laws. I would recommend her to anyone that owns a small business."