Gwinnett CPA Firm on Incorporating in Georgia as Taught by Duluth/Gwinnett CPA
Gwinnett CPA Firm on Incorporating in Georgia
Determining How to Best Determine if You Should be an S Corporation or LLC
When looking at what type of entity your business should be, we strive to balance the legal protection issues vs. the tax savings. Over the years, we have developed the mindset that there is no perfect election but there are ones that are better than others.
The information below and the assumptions we make are based upon the fact that my clients tell me that they want to pay as few tax dollars as legally possible. Below are some very specific rules, as well as some generalities. If you are considering incorporating in Georgia, we suggest that you sit down with a tax professional to see how these guidelines relate to you.
About S Corporations
Sub chapter S Corporations can have no more than one hundred shareholders and they all need to be U.S. citizens or resident aliens. This corporation type almost always has to have a calendar year as the fiscal year. S Corporation rules have been around since the 1950s and were set up to simplify the rules and regulations of being a business owner.
Liability Protection
A sub-chapter S Corporation, like a C Corporation, affords the business owner personal liability protection from business risks. Some of the keys to maximizing that protection is to treat the corporation like one by doing all your business in the corporate name, signing all of your documents listing your corporate title, not co-mingling any personal issues/bills in the corporation, and by having your annual Board of Directors and Annual Shareholder Minutes Meeting.
Taxing an S Corporation
No income taxes are paid with the corporate return. The profits of the business are reported on the personal tax return of the S corporation’s shareholders. As long as you pay yourself a reasonable salary, you may also take shareholder distributions out of the business that are devoid of FICA/Medicaid taxes.
Another advantage of S Corporations is that if you have corporate losses, and you fund (you put the money in the business) those losses personally, then you can deduct those losses on your personal return. Any losses that are funded by the bank (a direct loan from the bank to the corporation) or by trade creditors are not deductible.
Often you can set up a loan so that the bank lends to you personally and then you could do a personal loan to the company which will result in you having contributed basis/the dollars to the business, thus making any losses that you fund deductible.
To read more and see which entity type is best for you visit http://www.hiscpa.com/article2.html
Contact HIS CPA PC (A Christian CPA Firm) today.
To learn more about addressing IRS Tax Issues and Back Tax Returns visit http://www.hiscpa.com/working-with-the-irs.html
John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!
We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.
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Sphere: Related ContentRelated posts:
- Gwinnett CPA on Converting Your Georgia C Corporation or Georgia LLC to an S Corporation
- Forsyth/Gwinnett CPA Assist Taxpayers with Converting Atlanta Business Taxpayers to an S Corporation
- Incorporating in Georgia can Help with IRS Tax Issues and Addressing an Offer in Compromise
- Gwinnett CPA Teaches Understanging How Incorporating Your Georgia Business Can Affect Your Taxes and Liabilities
- Tucker/Gwinnett/Duluth CPA Firm Helps Atlanta Taxpayers Addressing Entity Selection Issues When Incorporating in Georgia
