Small Business Tax Savings Podcast What Is an S Corp and Should I Become One in 2023?
What Is an S Corp and Should I Become One in 2023? In this episode of the Small Business Tax Savings Podcast, Mike provides an in-depth analysis of the advantages of becoming an S-corporation. Mike reviews the different entity types and explains why an S-corporation is often a better option.
Mike covers topics of what an S-corporation is, when to become one, how to set it up, what constitutes a reasonable salary for an S-corporation owner, and how to maintain an S-corporation after.
Tune in now as Mike discusses all the details on how to minimize self-employment taxes and save money legally by electing to be taxed as an S-corporation!
[00:28] What is an S-Corp and should I become one in 2023?
- Today’s episode is, “What is an S-Corp, and Should I become one in 2023?”
- Mike discusses everything you need to know about S-corporations
[06:01] When Does An S-Corporation Make Sense?
- Self-employment taxes are roughly 15% of business profits
- An S-corporation makes sense when the business starts to profit around $40, 000 - $50, 000 per year
- You pay self-employment taxes on the reasonable salary option that you take as an owner of the company
- By electing for S-corporation status, you can avoid self-employment taxes on income over and above the reasonable salary
[10:32] What Are The Downsides Of An S-Corporation?
- What are the downsides of an S-corporation?
- Having separate business tax returns which is more complex and costly
- In order to be an S-corporation, you need to have an LLC or C-corporation set up
- S-corporations help minimize self-employment taxes
[16:54] Closing Segment
- Mike discusses all the details on how to minimize self-employment taxes and save money legally through electing be taxes as an S-corporation!
- Final Words
Key Quotes
“S Corp is simply a tax election. It is not an entity type. We're just electing for an LLC that we already have set up, or a C Corporation that we already have set up. We're electing for that entity to be taxed as an S Corporation. And really, the main reason for an S Corporation is to help lower the amount of self-employment taxes you pay.” – Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
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