Questions tagged [s-corporation]

S-Corporation (S-Corp) is a type of Corporation in the United States that has a preferential tax treatment under the Sub-chapter S of the Internal Revenue Code. Corporations (and limited liability companies that elect to be taxed as corporations) can elect that treatment if they qualify. Under this treatment the taxes are paid by the owners directly and double taxation problem is avoided.

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The USA "self-employment tax dodge" mystery

For non-US readers: In the US, for those who are self-employed, there are many specific taxes. One particular tax is the confusingly named "The Self-Employment Tax". Thus, if you are self-employed, ...
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21 votes
4 answers
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My business partner is unable to work; What should I do?

My business is an S-corporation and I have a partner. My partner is very sick and needing a liver transplant. He has been unable to work for over a year, and I am not sure when or if ever he will be ...
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12 votes
3 answers
2k views

What is a reasonable salary for the owner and sole member of a small S-Corp?

I am the owner and sole member of a small s-corp. I am a litte confused regarding the reasonable salary the IRS requires. The S-Corp is fairly small and requires very little work to maintain. Would ...
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10 votes
4 answers
2k views

I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC?

As an LLC with one owner, I had the option of filing using Schedule C on my household taxes, effectively treating business income (in this case, losses) as I would a sole proprietorship. My plan had ...
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10 votes
1 answer
1k views

Determining the minimum dividend that should be paid from my S corporation

I am the sole shareholder and only employee of an S corporation. I understand that all profits of the corporation are passed through and taxed as income to me. I also understand that all dividends ...
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9 votes
1 answer
139 views

What are the implications of lending money to my sole member S-corp?

My S-corp (sole member) is short on cash but needs to pay a large bill. Fresh cash is expected in the next months. Can I simply transfer money from my personal account to the business account of my S-...
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9 votes
1 answer
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What are the consequences of IRS "reclassification" on both employer and employee?

To begin, let me clarify that this question is not about how to avoid IRS reclassification. I want a better understanding of the consequences when it happens. Here, I am referring to when the IRS ...
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9 votes
1 answer
937 views

How do I keep an S-Corporation open when it has no revenues

I have an S-Corporation using which I used to do consulting work a few years back. Now, the revenues from that corporation has come down to zero. I hate to close it down in case I want to consult ...
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8 votes
1 answer
1k views

Can I turn myself into a pass-through corporation in order to save money on income tax?

Given the pending changes in the tax code, I'm wondering if I could legally structure myself as a pass-through corporation in order to decrease my income tax bill. How would I go about doing this? How ...
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8 votes
2 answers
761 views

Figuring S-corp taxes - salary vs. dividends

I am working on a business plan for a small business I'm going to be starting in the near future. I am going to incorporate as an S-corp. One of the line items on the business plan I have to present ...
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7 votes
1 answer
1k views

Does paying down debt in an S Corp decrease profitability?

Long story short - I'm a participating shareholder of a small S Corp that has debt. At the end of the year, since it's an S Corp, the profits/losses are passed down to the shareholders to be reported ...
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7 votes
2 answers
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Are S-Corp tax savings irrelevant at a high level of business income?

I have operated as a consultant under my LLC classified as an S-Corp, of which I am the sole owner and sole employee. Over the past many years, I have had, say, a business income of $60,000, which is ...
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7 votes
2 answers
316 views

Adult Entertainment Taxes; Independent Contractor, SMLLC, LLC, S-corp, etc?

I've been dancing for a few years. I've been filing taxes as an independent contractor. I do not receive any 1099s. All my earnings are cash, received that day. I pay a house fee (rent for being ...
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6 votes
2 answers
411 views

Is this formula accurate for weighing the difference between an S-Corp and LLC?

I have been doing much research before deciding on a S-Corp or LLC for an online start-up (2 people, software as a service). I've read lots of explanations of the two and their differences and I've ...
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6 votes
2 answers
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Is it possible to add a person to an existing LLC?

I have an existing LLC of which I am the sole owner/agent. I would like to add my spouse to the LLC as the second owner/agent. My reason for doing this is because I would like to file taxes for the ...
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5 votes
3 answers
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Capital Gains in an S Corp

In this question about s-corp distributions, the answer was given that an s-corp taxes all profit as personal income. That is, there are neither distributions nor dividends which can be taxed at a ...
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5 votes
2 answers
6k views

Can I invest C-corp or S-corp profits by purchasing stock, bonds or property to reduce tax liability?

If I own a C-corp or an S-corp in the US ( say for example Delaware ), and I take profits from revenue after expenses for the corporation and purchase stock in the US stock markets, bonds or other ...
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1 answer
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Health insurance deduction - better to buy through S-Corp or individually?

I have a S-Corp that I can buy myself insurance through. If my monthly coverage costs $380, is it more advantageous for me to purchase this insurance through my S-Corp and then use it as an employee ...
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5 votes
1 answer
234 views

What's required to claim "pass-through entity" tax rates, for a sole proprietorship under 2018 IRS tax rules?

Under the 2018 USA tax plan, I understand that "passthrough" entities are offered the same tax rate as corporations. What qualifies for this rate? An LLC? An S-Corp? Anyone who files Schedule-C? ...
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5 votes
1 answer
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What are the tax consequences if my S corporation earns money in a foreign country?

I work as an independent contractor developing software for various organizations in the USA. I usually bill a client an agreed upon amount and provide some specific service in return. For what it's ...
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5 votes
3 answers
654 views

S-Corp partnership startup. How to pay owners with minimal profit?

Just created an S-Corp this year - two owners, no other employees. We make profit, but just barely. I want to keep a portion of these profits in the company bank account, but I also want to distribute ...
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4 votes
2 answers
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Creating S-Corp: Should I Name My Wife as a Director/Shareholder?

I am creating an S-Corp for consulting services. I will be the sole employee for now, and likely for the foreseeable future. I am trying to figure out initial shares for the corporation, which will ...
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4 votes
1 answer
634 views

File LLC as S Corp?

I am in the process of creating an LLC and am trying to decide whether to file as an S Corp. I make $80,000 at my day job and would be paying myself (via W2) at least 30,000, so I would be above the $...
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4 votes
1 answer
121 views

All of salary in one month?

I run a business which is very unpredictable. A few months it may do no income and in 1-2 month it may make a 6 figure income. I like the FICA savings advantage of s-corps. But I don't want to pay ...
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4 votes
1 answer
534 views

Is this understanding of S-corp taxes correct?

I am putting together a business plan for a s-corp and trying to figure out how the taxes will work. Below is the scenario and my understanding: S-corp shareholders: 2 partners (husband & wife) ...
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  • 101
4 votes
2 answers
186 views

Distribution rules LLC vs. S-Corp

From research I understand that an LLC does not need to issue distributions in proportion with ownership e.g. A company can be 60-40 ownership but 80-20 profit distributions I also think an S-Corp ...
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4 votes
2 answers
4k views

Formation of S-Corp for Gambling Trade

Does anyone have personal experience with incorporating an S-Corporation for the gambling trade? In cases where the gambling activity is consistent and produces sufficient income (versus, say, an ...
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4 votes
0 answers
86 views

Should I create a simultaneous Part-time Sole Proprietorship and Part-time single-member S-Corporation?

I am self-employed and my business has two distinct parts: Engineering and Design - which makes $50k income / year Manufacturing and Sales - which makes $150k income / year I am currently running ...
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3 votes
2 answers
146 views

Filing a corporation tax return online?

I have an S-Corporation in Illinois, and the IRS website just has me going in circles and confused. My revenues are very small, so I'm not sure if I am required to have a professional do my taxes, or ...
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3 votes
1 answer
112 views

Deadline for Electing S-Corp Status -- What does it mean?

Got a new gig as a contractor, and I am considering forming an S-Corp for various reasons. I have seen a few references to the deadline for electing S-Corp status being March 15th. One example: ...
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3 votes
1 answer
781 views

Buying car as S-corp

I have an S-corporation and I will be buying a car under it today. There are somethings I am unsure about it which I would like to confirm. Do I pay for all the costs of the car out of my business ...
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3 votes
1 answer
187 views

Can an LLC choose to be taxed as a partnership after electing to be taxed as an s-corp?

Once an LLC chooses s-corp status for tax purposes, can they choose say in one years time to be treated as a partnership for tax purposes?
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3 votes
1 answer
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Are distributions from an S corp taxable as long term capital gains?

We have several shareholders. As needed, we will do a distribution for taxes. We are being told that these distributions are taxable as long term capital gains. Is that right? Should shareholder ...
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3 votes
1 answer
267 views

LLC or S Corp under new tax law

I and my wife have a small business that is registered in MA as an S-Corp, we have also a rental property. I am told that to protect ourselves it is better to register the rental property as LLC. I ...
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3 votes
2 answers
204 views

SIMPLE-IRA - Can multiple S-Corporations contribute to the same account?

I recently set up a SIMPLE-IRA account at an online brokerage. I have two S-Corps that pay out SIMPLE-IRAs to its employees. Can I distribute money from both S-Corps to the same SIMPLE-IRA account ...
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3 votes
1 answer
150 views

Loan to S-Corp cannot be paid back, how to deduct from personal taxes?

I gave a $15,000 loan to an S-corp where I have a 10% stake. The K1 I got this year only allows me an ordinary loss of $600. However, I know that this business will soon be shut down without the ...
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3 votes
1 answer
137 views

EIN for personal LLC: Is this an S-Corp?

I'm currently a software developer, and it looks as though I'll be transitioning to doing 1099 work much more often than W-2 work. As such, I've decided to open a personal LLC in the State of Florida. ...
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3 votes
2 answers
682 views

S-Corp Estimated Tax Payments

I plan on splitting my s-corp income 50/50. I hope to make 80K this year, 40 on payroll, the other 40 as distributions (s-corp income). I’m figuring the first 40K will be, mostly, at the 15% bracket. ...
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3 votes
1 answer
202 views

Sole employee S-Corp 401k - Can Company portion also be made to be Roth?

I have an S-corp for which I recently established an Individual 401K plan with one of the top 4 plan administrators. I understand that the employee contribution can be either traditional or Roth. ...
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3 votes
1 answer
111 views

California S Corp Net Income and Employee Compensation

I was looking into S-Corp structures. In California, S-Corps are taxed at a 1.5% rate on their net income. What I couldn't figure out is if this 1.5% rate applies to the income of the S-Corp after ...
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3 votes
1 answer
109 views

Yearly tax calendar for my S-Corporation: What tax forms are due on what dates?

I'd like to create a document that's basically a yearly tax calendar for my S-Corporation. My accountant handles my taxes, but she is completely disorganized and it drives me insane. Basically what I ...
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3 votes
0 answers
48 views

Question regarding Opportunity Zone investing

With Opportunity Zones, you have 180 days to reinvest capital gains. I have capital gains from the sale of land through an S Corporation. I have received a K-1 outlining those gains from the S ...
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3 votes
0 answers
71 views

Can You Receive Both a Simple IRA and SEP IRA?

I am the employee of two companies. At one company, I receive a SEP IRA. I know that SEP IRAs are not included in the standard annual elective deferral limit. At the second company, I have the ...
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3 votes
0 answers
123 views

Capital gains treatment of selling all the assets of an S corporation?

I sold the assets—not the stock—in an S corporation that is owned by my spouse and myself. The sale was a cash sale of all income-producing assets of the S corp. Since the sale, the S ...
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2 votes
3 answers
416 views

LLC-SCorp to self - actually, does the corp pay payroll taxes?

In the USA. Here are the two common scenarios for the self-employed: A. Joe makes 100,000 over the year. It's paid to him as 1099 payments from his various clients. Joe pays the many taxes on that. ...
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2 votes
1 answer
110 views

What are the advantages of LLC over S-Corp?

I saw a video that mentioned that if you don't want to withdraw all your company's net profit and want to invest it again on the company, it's better to have a LLC over the S-corp. Is that true? May ...
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2 votes
1 answer
106 views

What's the difference between S-corp vs LLC file as S-corp?

I want to set up a company and I will be the sole owner. After doing some research, I think S-Corp would be a good fit. But I also found that I can start a company as LLC and file tax as S-Corp? ...
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2 votes
1 answer
126 views

Why is K-1 business income taxed at 50%?

I'm using TurboTax for my taxes (which of course are due tomorrow), and my wife's S Corp (50% owner) had a profit of roughly $14k, which they did not withdraw. It stayed in the corporate bank account,...
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2 votes
1 answer
61 views

Can an S-Corp pay the sole owner/employee with a 1099?

Suppose a person has a one-person S Corporation, and the corporation is paying the owner/sole employee with a 1099. The owner then pays Self-Employment tax on a Schedule C when filing. Is this ...
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2 votes
1 answer
412 views

Found Mistake on 2013 1120S Form

I had a CPA do my corporate taxes last year. I did not have a good experience, so I am doing them myself this year. In the course of working through my return via TurboTax Business, I discovered a ...
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