S Corporation

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S Corporations get their name from filing on IRS Corporation rules Subchapter S. This popular small business structure is legally a corporation, but taxed as a pass through entity. Until the single member LLC (files as a sole proprietorship) or a multi-member LLC (files as a partnership), the S Corporation allows the business to divide the payments to the owner into payroll (subject to payroll taxes) and profits (not subject to payroll taxes). In contract, the other structures require the owner to pay self employment taxes on the full income.

S Corporations must have a limited number of shareholders (< 100), a single class of stock, and be entirely owned by natural persons or estates. This structure is a very popular, and tax advantaged status for small businesses. This status avoids double taxation of a C Corporation, and also allows you to avoid self employment taxes by dividing your income between payroll and profits, with payroll subject to FICA taxes and profits being subject to ordinary tax rates less the Qualified Business Income deduction.

Under the 2017 The Tax Cuts and Jobs Act (TCJA), S Corporations because even more advantageous. When you have pass through business income, you receive a tax deduction of 20% of your “Qualified Business Income.” There is a qualification test based type of business, but only for taxpayers with a taxable income over $332,600 (or $163,300 for singles) in 2020, increasing each year.

For most small business owners, this essentially reduced their tax bill on all business profits, which is generally the majority of their income. For high earning individuals, it is important to review the QBI qualification rules, but if your income is under the threshold, you simply get your taxable income reduced.

Fractional CFO Benefits

By |2023-03-31T11:32:15-04:00March 23rd, 2023|Categories: Quickies with Bette|Tags: , , , , , |

A Fractional CFO provides high-level financial guidance and support to help a business achieve its financial goals and improve financial performance. The great thing about them is that they are a cost-effective solution for businesses that don't require a full-time CFO but still need financial expertise and guidance. 

State Business Taxes

By |2022-02-09T13:16:35-05:00February 9th, 2022|Categories: #TaxTipTuesday|Tags: , , , , , |

If you think you may have state tax reporting requirements want to inquire about state nexus reporting, let us help you get the answers you and your business need. We are here to help you file your state taxes accurately.

Tax Deadline is Tomorrow | 9/15 – Video

By |2021-10-01T14:54:10-04:00September 14th, 2021|Categories: #TaxTipTuesday|Tags: , , , |

Hi, I'm Bette Hochberger, CPA, CGMA, and you're concise tax tip Tuesday today is that tomorrow is September 15th is the S-corporation, the partnership, LLCs that are taxed as a partnership. It is your deadline. If you are still working on your stuff, your CPA is very mad at you.

Your Start-Up Business Needs A CPA

By |2022-12-16T14:11:14-05:00June 29th, 2021|Categories: Quickies with Bette|Tags: , , , , , , , , , |

Hi, I'm Bette Hochberger, CPA CGMA, and on today's Business Quickie, we're going to talk about six reasons why your startup needs a CPA. Now, I can tell you all sorts of horror stories, and I'm sure you find anyone who started a business. They can also probably tell you many horror stories about not having the right professionals on board, not having an attorney, not having a CPA, all these things. So, if you think hiring a CPA is not worth the investment in your business; here are the six reasons why you should.

How to Fill in Form 2553 Election by a Small Business Corporation S Election

By |2020-12-01T02:03:48-05:00July 5th, 2018|Categories: |Tags: , , |

S Corporations are popular and have many tax advantages. If you wish you make your new (or existing) corporation an S Corporation, you need to fill our Form 2553 for the S Corporation Election.

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