Nick Braun EA PhD's Articles - Modirac Article Directory

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Nick Braun EA PhD's Articles

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Taxation of S Corporations One of the main reasons people set up an S corporation or make the S corp tax election for their LLC is to save self-employment taxes. Owners of S corporations are taxed much more generously. Salaries and bonuses are still subject to income tax and self-employment tax. Tax Treatment of Limited Liability Company LLCs enjoy very favourable tax treatment. They don’t have their own set of tax rules and there’s no such thing as an LLC tax return. What makes them special is that members can choose how the business is taxed. How to Deal with C Corporation Tax The difference between C corporations and all the other entities is that C corps pay their own tax – they are not pass-through entities. The corporation pays corporate income tax on its profits at the following rates: Starting a LLC LLC stands for Limited Liability Company and the owners are called members. The LLC is a relatively new type of business structure. It was only in 1996 that most states had recognized them. Setting up an S corporation We will take a close look at the drawbacks and S corporation advantages, also known as S corps. S corps offer limited liability and simple tax treatment. They’re pass-through entities which means the profits of the business pass through to the owners personal tax returns.