Why an S Corporation might secure success for your small business

For entrepreneurs ready to start a corporation, navigating different benefits of different business types can be tricky. Luckily, the Wall Street Journal recently discussed why some businesspeople find S corporations are best.

S corporations provide liability protection while still allowing business profits to pass through the shareholders’ personal tax returns. This means businesspeople are protected from the doubles taxation that C corporation owners incur.

To make the most out of S corporations, the source advises business owners to pay themselves a reasonable salary which is subject to affiliated to payroll taxes. This renders the dividend the owner takes free of employment taxes and it isn’t subject to a corporate tax rate.

As with any formal entity, it’s important to keep careful records in the event of an IRS audit, but proper documentation can mean legal salary savings. The source says the only difference between setting up an S corporation and any other company is the necessary selection of S status on a special IRS form.

This insight might really help new business owners get off to a strong start. The Christian Post says forming an S corporation is a top tax tip for 2010 to bring successful IRS representation. The source says its often tax advantageous even for businesses that are already set up as LLCs or C corporations to consider converting to an S corporation.ADNFCR-3052-ID-19695430-ADNFCR

Melissa Clark
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Melissa Clark

Head of Content & Customer Marketing at Incfile
Melissa sets the vision for Incfile's content marketing and customer relationship management. Melissa has more than 10 years experience in various marketing roles, and a passion for supporting small businesses as they incorporate and grow. She loves sharing information that will help business owners maximize their LLCs, Corporations and Nonprofits. In her spare time, Melissa is an active member of The Junior League and enjoys running half marathons.
Melissa Clark
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