Ever thought about "incorporating yourself"? If so, you’ve probably heard about S corporations, or better known as “S-Corps”. What makes S-Corps so popular and are they the right move for your business?
An S-Corp is a special type of corporation that allows income, losses, deductions, and credits to pass through to its shareholders for federal tax purposes. This means the company itself doesn’t pay income tax. Instead, shareholders report the business’s income and losses on their personal tax returns, potentially saving money by avoiding double taxation. Sounds pretty good, right?
Before you start doing the paperwork to become an S-Corp, make sure your business meets these requirements:
Keep in mind, rules around corporate liabilities can vary by state. It's important to check the specific laws in your state to make sure an S-Corp is right for you.
If you're looking for tax benefits and want to protect your personal assets, an S-Corp might be the perfect fit. But remember, every business is different. Consider your specific needs and chat with a tax advisor or attorney to make sure you’re making the best choice.
Incorporating can sound complex, but with a little research and the right help, you could be on your way to reaping the sweet rewards of an S-Corp!