Elect S corporation status by March 16

If you own a small business, you have until March 16, 2015, to choose S corporation status for this year. In order to become an S corporation, you’ll need the unanimous approval of all shareholders.

 

The principal advantage of an S corporation is that you avoid paying double taxes. In a traditional C corporation, profits are taxed at the corporate level, and they’re taxed again when paid to individual shareholders as dividends. In an S corporation, there are no taxes on earnings at the corporate level. Instead, profits or losses flow directly through to the shareholders. They pay taxes only once, when they report their share of earnings on their individual tax returns.

Another advantage: Doing business as an S corporation can be attractive in the early, unprofitable years of a start-up business. That’s because operating losses flow through your personal tax return, perhaps offsetting other taxable income. Losses are available to the extent of your basis in your stock plus loans directly from you to your corporation.

There are some trade-offs for these tax benefits, though. If you’re an owner-employee and own more than two percent of the company, you’ll receive less favorable tax treatment of some fringe benefits. There are also ownership limitations. The company can have only one class of stock, there can’t be more than 100 shareholders, and all of the shareholders must be U.S. citizens or residents.

Despite these drawbacks, doing business as an S corporation can still offer some tax planning advantages. If you can meet the ownership requirements, it might be well worth considering an S corporation election. Contact our office for an in-depth analysis of the pros and cons for your company.

Small business accounting services in Waukesha and Milwaukee

As a small business owner you have more important things to do than to keep your own books. We take care of your books for you, so you can get back to the job of running your business and generating profits

Small Business Accounting Services available

Bank Reconciliation – Protect yourself and your small business.  Timely reconciling and objecting to your bank about unauthorized checks.  Identify lost checks or deposits.  Get a better idea how your business is doing with an accurate financial statement.

Income Statements– Track your revenue and expenses,  Identify expenditures, Determine your tax liabilities.

Balance Sheets– Get a snapshot of the financial health of your business.

New business Start-up Consultations

Bookkeeping services

You can benefit from our wide-ranging knowledge and expertise. Contact us today and learn more about our unique capabilities.

Edith Christian CPA
262-646-2008

N9 W29360 Thames Road
Waukesha, WI 53188