Explore the key differences and benefits between S Corporations, C Corporations, and Sole Proprietorships to choose the best structure for your business.
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Converting to an S Corporation is widely touted as a tax-savings feature. In addition, the Tax Cuts and Jobs Act of 2017 came with reduced C Corporation tax rates and the possibility of saving income taxes through a C Corporation.
However, we often see clients who are not maximizing the tax-savings potential of an S Corporation. Put another way, we often see clients who are not saving any money in taxes by converting to an S Corporation.
You are invited to participate in a webinar analyzing the potential tax savings of an S Corporation, when to consider converting to an S Corporation, and how to maximize the tax-savings. The webinar will close by reviewing several basic tips for operating your business.
Get the webinar started by clicking the video below.
Throughout the webinar, reference is made to handouts. You can download the handouts here.
Unlock the full potential of your S Corporation with our tailored services. We assess the tax benefits of converting from a C Corporation, optimize your salary and distribution strategies, and advise on effective expense allocation. Our goal is to help you maximize tax savings and ensure efficient use of your S Corporation structure.
Stay compliant and tax-efficient with our expert services. We develop and review annual tax plans, prepare and file accurate S Corporation tax returns, and handle IRS Form submissions. Trust us to manage your tax needs and keep your S Corporation on track.
A: Quite simply, it was born out of need. As our practice grew, more of our business clients requested that we provide payroll service. They did not want to have multiple services. As we embraced this opportunity to better serve our clients, we also saw an opportunity to help our clients avoid big income tax bills and to create a better tax planning experience. When a client uses a third-party payroll service, we are limited in guiding them on the amount of withholding and the amount of the owner’s salary. A third-party service only withholds based on the salary, but an S Corporation owner needs to also account for the profit. It’s difficult to explain to a client that there is not enough withholding, and then not be able to help them adjust it. When we have direct responsibility for payroll, we can alert the client to potential withholding concerns, explore opportunities for more deductions, and help them maintain compliance in calculating the owner’s salary. The S Corporation reasonable salary requirement is a major tax planning opportunity that comes with hidden traps and pitfalls, and we want to help our clients achieve tax savings while staying out of trouble.
A: The two most common complaints we hear about payroll are the sheer aggravation of payroll compliance and insufficient withholding for the business owner. Most business owners are not interested in getting bogged down in the minutia of calculating payroll taxes, paying payroll taxes on time, and preparing and filing payroll tax returns and W-2s. If a business owner was to do all this by hand, it would definitely take a lot of time and involve frustration and aggravation. Software takes the guesswork out of calculations, and our software ensures compliance through electronic filing and electronic payment of taxes.
One of the biggest complaints we hear is from a business owner who says their friend doesn’t have to pay any income taxes or is receiving a refund. Some clients have even tried to report as an S Corporation, only to get frustrated with the extra compliance requirements of payroll. It’s hard to answer these objections without putting it all into perspective. It’s hard for any business to pay absolutely nothing in income taxes unless they are generating a lot of deductions or reporting a loss consistently. The average small business owner can efficiently use payroll withholding to cover income taxes and plan ahead. I think what most people mean when comparing themselves to a friend who doesn’t pay any tax is that their friend planned ahead through withholding taxes. When we can help our clients through payroll, we will provide the same level of service, so you can be the one who says, “I didn’t have to pay any taxes last year,” meaning we helped you cover your tax throughout the year.