Why you should consider operating as an S corp?
If your business has profits of over 60K a year you should consider the benefits of operating as an S corp. Many people already know that the use of an S corp. can help lower self-employment taxes but there are many more benefits. An S corp. can help decrease self-employment taxes, lower audit risk, and provide large retirement deductions.
Using an S corp will not eliminate self-employment taxes but it will allow you to reasonably allocate your profits between salary and business income. Depending on how you divide your income, you could save a substantial amount on self-employment taxes just by converting to an S-corporation.
Lower Audit Risk
The IRS continually tracks the “tax gap,” or the amount of tax liability faced by taxpayers that is not paid on time. A huge portion of the tax gap is attributable to Schedule C under-reporting; this is the reason why the IRS audit efforts focus so heavily on Schedule C. Additionally, claiming several years of losses in a row on Schedule C will increase audit risk with the IRS arguing that the “business” is really a “hobby” and that the losses should be disallowed.
Larger Retirement Deduction With Solo 401K
With a standard SEP plan self-employed individuals can deduct up to 20% of their income but with a Solo 401K plan individuals can defer up to 18K of their wages plus 25% of their gross wages (Capped at 53K). A husband and wife who both work in the business can defer up to 106K combined.
Our Solo S Corp. Package Provides Comprehensive Tax and Accounting Services For A Flat Quarterly Fee Starting At $600. It Includes The Following:
Quarterly or monthly bookkeeping using our secure cloud based accounting software.
Complete payroll processing including all federal and state filings. Including 401K deductions and other withholdings.
Total package tax filing and planning.
We specialize in Solo S corps please contact us for a more information and a free quote.