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Ready. Set. Incorporate! https://www.readysetincorporate.com/faq-items/what-are-the-advantages-of-operating-my-business-through-an-s-corporation/ Export date: Fri May 3 9:58:26 2024 / +0000 GMT |
What are the advantages of operating my business through an S Corporation?Top three reasons: Tax. Tax. Tax. Which is why they were created to begin with back in the day (1958), to encourage small business creation in the U.S. An S Corporation 1 has a “single layer” of tax, i.e., unlike C Corporations 2 (which is what all corporations 3 formed in the United States are unless they make the election to be taxed as an S Corporation) which have a corporate-level tax, and then a second tax at the shareholder [LINK TO What are stockholders and shareholders] level when dividends 4 are paid, S Corporations are taxed only at the shareholder level (though there is a state tax in California). Also, an S Corporation structure allows you to divide outflow to its shareholders (owners) between salary (taxed at higher earned income rates) and distribution (taxed at preferred non-earned income rates). There are limitations: The number of shareholders is limited, an S Corporation may have only a single class of stock 5 , and the rules limit who or what may own shares in an S Corporation. |
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Post date: 2020-09-02 05:16:09 Post date GMT: 2020-09-02 12:16:09 Post modified date: 2020-09-02 05:16:09 Post modified date GMT: 2020-09-02 12:16:09 |
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