In today's episode of The Legal Paige Podcast, I am diving deep into S corporations and with the upcoming tax season that we're having, it's really important to understand the benefits of S corporations prior to March 15th, because that's the deadline to file for 2021.
Things we talk about:
All of the reasoning behind why becoming an S corp and designating such as an LLC is important for tax purposes.
What is an S corp exactly.
How to decide which business entity is right for you.
Why a designation like S corp can save you a lot of money when it comes to tax season.
IRS requirements as an S corp and why it's important to work with a CPA in your hometown.
Here are a few quotes:
"So the first thing that I want to go over is what is an S corp Paige? So an S Corporation stands for subchapter S-corporation, or sometimes called a small business corporation, and what this is, is it's a special tax status granted by the IRS."
"In order to be an S corporation, you first have to form your business as some type of limited liability company or incorporation in your state. I always suggest for solo entrepreneurs, just follow your articles of organization as an LLC for legal purposes in your state, then you're going to have this limited liability protection around you. You're going to be a registered business entity in your state, and then you're going to elect to be an S corporation through the eyes of the IRS."
"There's also some strict requirements that you have to do through the IRS for an S-corporation. And if you don't meet any of those requirements, the IRS can revoke your S-corporation status immediately, and then they will tax it as a C corporation instead, which would be hugely problematic during tax season. S don't violate any of those IRS requirements that we talked about at the beginning of the episode."