Business entity registration

Remind me of all the tax benefits that come with an S-Corp?

What are the main reasons to transition my self-employed business to an S-Corp versus an LLC? And once I’m an S-Corp, how does that change my daily bookkeeping?

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  1. 3 Answers

    Benefits of setting up your business as an S-corporation tax entity are:
    – Protects personal assets of its shareholders.
    – pass-through taxes are paid by shareholder’s individual tax return to avoid double taxation. This also means any losses can reduce income tax paid by all sources of income on the the shareholder’s tax return.
    – treatment of shareholder’s as an employee paid a “reasonable” salary reduces FICA taxes paid.
    – Qualified Business Income (QBI) deduction allows 20% deduction for business profits and losses, not salary. This reduces self-employment tax and possible marginal tax to less than 30%

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