Seeing your small business start to succeed and grow into a well-established company is a dream come true. But as your company grows, your tax rate tends to grow too. Growing companies face a variety of complexities during tax season, and that’s why when your company starts growing, you may want to consider forming an S Corporation, otherwise known an S Corp. The S Corp is a business entity that offers significant tax advantages while still preserving your ownership flexibility.
What is an S Corp?
An S Corp, small business corporation, is a tax code that was enacted into law by Congress in 1958. The S Corp was created to encourage and support the creation of small and family businesses, while eliminating the double taxation that conventional corporations were subjected to.
There are several advantages to forming a business entity. It protects your personal assets, gives you more financial visibility, and can make it easier to manage your taxes. If you choose the right type of corporate structure, you can significantly lower your yearly tax bill.
The easiest way for most business owners to reduce tax bills is to be taxed as an S Corporation. You can do this either by:
- Forming an S Corporation.
- Forming a Limited Liability Company (LLC) but electing to be taxed as an S Corporation.
- To understand why getting taxed as an S Corporation is more tax effective, it’s useful to understand the types of taxes you will need to pay.
The S Corp Tax Calculator
The S Corporation tax calculator below lets you choose how much to withdraw from your business each year, and how much of it you will take as salary (with the rest being taken as a distribution.) It will then show you how much money you can save in taxes.
An S Corporation must adhere to the following limitations:
- It may not have more than 100 shareholders.
- It is required to be a domestic business entity.
- The shareholders of the S Corporation must be US Citizens or legal residents of the United States.
- The S Corporation is restricted to only one class of stock.
Depending on your long-term business goals – for example, if you want your company to be publicly traded, or if you want to have international shareholders, a C Corporation might be a better choice of business entity, because C Corporations have no limitations on ownership and can offer multiple classes of stock.
Services we offer :
- Name Availability Check
- Help form your S Corp quickly and efficiently
- Notices of Various Corporate Meetings
- Articles of Incorporation
- Sample Bylaws
- Minutes to Document Meeting