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S-Corporations

An S-Corporation is a wonderful tool with which to save self-employment tax dollars. The tax savings on $100,000 of net self-employment income is $7,600 dollars.

There are some requirements when creating an S-Corp, however.

  • You must prepare your business 1120-S tax return before your personal 1040.
    • A Schedule K-1 is created when preparing the 1120-S. It reports the S-Corp members share of the business earnings, losses, deductions, and credits. The K-1 must be completed and used to prepare the personal tax returns for all members of the S-Corporation.   
  • It is very important to have a separate business bank account and credit card for your S-Corporation. Co-mingling business and personal income and expenses is a RED FLAG for the IRS.
  • An S-Corporation must have a PAYROLL SERVICE. This should be with Next Step Enterprises LLC Payroll Service. Contact [email protected] to get started.
  • An S-Corporation needs to have a BOOKKEEPING SYSTEM in place. Proper bookkeeping will ensure you know the financial status of your business, enable you to secure loans and lines of credit, and greatly facilitate the preparation of your business’ 1120-S tax return. 
  • Using accounting software like ZERO or QuickBooks Online is an excellent idea. Contact [email protected]  to discuss your company’s bookkeeping needs.
  • S-Corporation employees will receive a W-2 from the company with appropriate taxes withheld.  However, W-2 wage withholding covers approximately 40% of your taxes due. You MUST pay estimated taxes between 22-25% on the remaining 60% of your net income.

Form Your S-Corporation Now!

We are ready to form your LLC and make the S-Corp election so you can save tax dollars.

Schedule a call so we can determine the best path forward for your business.