💼Structuring your business as an S-Corporation can lower your self-employment taxes.
🔒Organizing as an S-Corporation provides personal liability protection.
💰You can classify your income as salary and distributions to save on taxes.
🔍The IRS closely scrutinizes S-Corporation returns for potential errors and fraud.
🗓️Deciding on a reasonable salary for yourself is crucial to avoid red flags with the IRS.
How does an S-Corporation lower my taxes?
—By dividing your income into salary and distributions, you only pay self-employment taxes on the salary portion.
What is personal liability protection?
—S-Corporations protect your personal assets from business debts and liabilities.
Why does the IRS closely scrutinize S-Corporation returns?
—S-Corps have a higher potential for errors and fraud due to their tax benefits.
How do I determine a reasonable salary for myself as an S-Corporation owner?
—Factors like training, responsibilities, and dividend history help determine the reasonable amount.
Are there additional costs associated with running an S-Corporation?
—Yes, you may have ongoing accounting costs, payroll expenses, and additional state fees and taxes.
00:00In this video, learn about the benefits of structuring your business as an S-Corporation.
01:12Self-employed individuals have to pay self-employment taxes, which can be higher than taxes paid by employees.
02:26S-Corporations allow you to classify your income as salary and distributions, reducing your self-employment tax liability.
03:08However, the IRS closely scrutinizes S-Corporation returns for potential errors and fraud.
04:14Determining a reasonable salary is crucial to avoid triggering an IRS audit.
05:11S-Corporations provide personal liability protection, safeguarding your personal assets.
06:04Running an S-Corporation may have additional costs like accounting expenses and state fees.
06:22Consult with a professional to evaluate if an S-Corporation is the right choice for your business.
