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Old 02-28-2012, 09:01 PM
 
Location: Sherwood
5,545 posts, read 8,738,206 times
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Can you guys share any benefits or negatives about S-corp versus regular corporations for a small business? If I don't pay myself a salary, is it beneficial to have an S-corp?
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Old 02-28-2012, 09:39 PM
 
Location: Conejo Valley, CA
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A S-corp is a pass-through entity and the benefits/negatives depend on what you're doing. There is really no way to answer this generally, it depends on the details.
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Old 02-29-2012, 06:58 AM
 
Location: NC
5,436 posts, read 3,720,076 times
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Quote:
Originally Posted by kinkytoes View Post
Can you guys share any benefits or negatives about S-corp versus regular corporations for a small business? If I don't pay myself a salary, is it beneficial to have an S-corp?
Are you planning on living off of draws from the accumulated earnings of your proposed S Corporation?

The IRS would frown upon this, you always need to pay a reasonable salary if financially able to do so.

S Corporation passes through, limits legal liability, and the earnings will be reported via a schedule k-1.

Losses in an S Corporation are only deductible as long as you have positive accumulated earnings (AAA).
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Old 02-29-2012, 10:42 PM
 
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S Corporation:

You have to pay yourself a reasonable salary (when compared to similar compensation in your industry).

Income and losses flow through to the owner.

You have limited liability like any corporation.

You are limited to the number of shareholders you may have, and who may be an shareholder.

C Corporation:

It is not a pass-through entity so the income gets taxed as the corporate level, and then again when you get a dividend distribution.

None of the s-corp shareholder restrictions.
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Old 03-01-2012, 11:01 AM
 
Location: Sherwood
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So, for an S-corp I file personal income taxes w/ an extra form.

For a C-corp I file my personal income taxes and Also file corporate income taxes?



Which one allows me to take the most deductions?
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Old 03-01-2012, 10:14 PM
 
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That is not how it works at all. Consult a local CPA.
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Old 03-02-2012, 08:22 AM
 
Location: Sherwood
5,545 posts, read 8,738,206 times
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Quote:
Originally Posted by MrLemon View Post
That is not how it works at all. Consult a local CPA.
I can't afford a local CPA until I get actual profits. At any rate, thanks for the feedback, guys.

I'll keep the regular corporation and pay myself dividends. If there are any problems I'm sure I'll get to learn the correct method at tax time.
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Old 03-02-2012, 10:14 AM
 
Location: Conejo Valley, CA
12,472 posts, read 11,984,794 times
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Quote:
Originally Posted by kinkytoes View Post
I can't afford a local CPA until I get actual profits. At any rate, thanks for the feedback, guys.

I'll keep the regular corporation and pay myself dividends. If there are any problems I'm sure I'll get to learn the correct method at tax time.
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Old 03-03-2012, 09:44 PM
 
58 posts, read 112,965 times
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Quote:
Originally Posted by kinkytoes View Post
I can't afford a local CPA until I get actual profits. At any rate, thanks for the feedback, guys.

I'll keep the regular corporation and pay myself dividends. If there are any problems I'm sure I'll get to learn the correct method at tax time.
That's a terrible plan. You should figure out the tax consequences now. BTW, why do you want to have your entity be a corporation?
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Old 03-04-2012, 04:16 PM
 
Location: 221b Baker Street
21,999 posts, read 18,098,286 times
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Quote:
Originally Posted by kinkytoes View Post
I can't afford a local CPA until I get actual profits. At any rate, thanks for the feedback, guys.

I'll keep the regular corporation and pay myself dividends. If there are any problems I'm sure I'll get to learn the correct method at tax time.
If that is the case and logic you really should rethink your plan or can it all together. That mentality of taking the gamble is a perfect setup for disaster.

Pay a bit now or pay tons more in fees and fines later.
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