Last piece in the Incorporating Puzzle
This is a flow through to an Individual and is the best vehicle to pay yourself from. If you live in another state (most of you do) this is the best way to control your income. You get to decide how much salary you are going to pay yourself. Thus you control how much State income tax you are going to pay the state your in.
Salary is a 100% deduction.
Sub Chapter S Corporations can own Property (land, cars, boats, planes, etc.) these can be depreciated. Maintenance can be taken as a deduction.
If you sell a Property (land, cars, boats, planes, etc.) and make money on that property, (Capital Gains) there is a 15% cap on the taxes you pay and can be as low as 5%, depending on the amount of Capital Gains.
Sub Chapter S Corporations can pay for business trips. Full deduction.
Medical Insurance must be deducted from the individual’s tax return.
Sub Chapter S Corporations can take all normal expenses, pay salary and stock holders can take distributions. Distribution are the monies the company has left over at the end of the year. Everyone must pay Basic Federal Taxes but not everyone would have to pay taxes to the state they are in nor the Social Security and Medicare. Such structures can save a lot of money.
You can have one Stockholder if you like, or up to 100 people if you like.
Sub Chapter S Corporations must have a December year end.
The 2553(IRS Link) must be filed within 75 days of forming the company or in the first 3 months of the year.
Disadvantages Sub-Chapter S // 1120S Form
You lose your privacy and are named in the 2553 to the IRS. Your name is on public record with the Secretary Of State. (If you chose the Deluxe package -Extra level Privacy, we can use your Nevada address and make it harder for anybody to identify you from the public records.)