By Jason Watson (Google+)
Posted November 23, 2018
This chapter about operating your S corporation focuses mainly on payroll, and the reasonable S Corp salary determination. Here is a brief recap of some of the key points-
- Having an S corporation is very similar to an LLC in terms of hassles and headaches. If you think having an LLC is not a big deal, having an S corporation will be the same. If you consider having an LLC to be a pain in the butt, having an S corporation isn’t going to make it easier.
- The savings can be huge. Most S Corps earning about $150,000 will see about $9,500 to $10,000 in savings. For kicks, please review Line 57 of your individual tax return and imagine reducing it by 60 to 65%.
- The break-even where an S Corp election makes sense is about $30,000 in net business income after expenses. This is determined by dividing the annual cost of our S Corp package ($2,940) by 8% to 10% in average savings.
Don’t forget to review our chapter on tax deductions and fringe benefits. Several business owners want to know which deductions they can and cannot take- we’ve included those lists in the chapter, but we’ve also listed a bunch of expenses that might become tax deductions if you position yourself carefully.
Recall that the trick is to find ways to deduct money that is already budgeted to leave your person like trips to Vegas and fancy sports cars.
Taxpayer's Comprehensive Guide to LLCs and S Corps : 2019 Edition
This KB article is an excerpt from our book which is available in paperback from Amazon, as an eBook for Kindle and as a PDF from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles, click on the fancy buttons below or visit our webpage which provides more information at-