2/7/23 - What’s an S-Corp? And when should I become one?

Ever heard the term S-corp? No clue what it means?

In today’s episode, we’re talking all about S-corp basics. This is for the business owner who has less than $100K in revenue and has heard the term but has no clue what it means. Or just someone wondering if they should be an S-corp. (Spoiler alert: you’ll know by the end of this episode!)

An S-corp is an IRS designation for a special way to do your taxes. It is a tax designation, as opposed to an LLC, which is a legal designation.

Note: If you haven’t listened to last week’s episode, this one follows right along, so you may want to go back and listen to that one first. Also, if you’re still unsure about how LLCs work, I explain it all in episode 4.

The right time to become an S-corp is when your total profit exceeds the amount of “reasonable compensation” (as defined by the IRS) for yourself, PLUS the costs related to being an S-corp.

These include:

Running payroll - $50/month
The cost of the software to run your payroll expenses
And an S-corp tax return can cost anywhere between $800-$4,000

How do I become an S-corp?

You need to file a form with the IRS by 3/15
HOWEVER, If you listened to this episode and you think an S-corp is for you…talk with your CPA first, and ask if they think it makes sense for you!

Make sure you listen to the show - there are lots more details and some real-life examples to explain it all!

Hey Friend - do you have questions about taxes or QuickBooks? I want to hear them. I’m doing an upcoming “Mail Bag” episode where I will answer your questions. Here’s the link to my “Mail Bag” - submit a question for me to answer on the Podcast. Remember, no question is “little” or “silly”. And if you’re still nervous, I’m happy to keep them anonymous.

So until next time, may your week be filled with love and profit!

******

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