Should I Form a S Corporation for Tax Benefits?
Most start-up companies should start out as a LLC or S corporation versus a regular C corporation because of tax advantages. Any income from a S corporation is only taxed at one level, whereas income from a C corporation is taxed at the corporation level and again when a withdrawl occurs.
The reason that a S Corporation is the preferred corporation type is if your business operates at a loss the first year, you will be able to pass that loss through to your own personal income tax return, reducing your taxes that you will owe. Also, if you decide to sell your business at a later time, you lose less to taxes as a regular C Corporation. In addition, you will be able to change from a S Corporation to a regular C Corporation at a later date if you feel those advantages offset the S status.
|
|
