Guest wjr Posted March 19, 2003 Posted March 19, 2003 Can someone in layman's terms briefly tell me why a small business would be set up as a S-Corp versus a regular corp?
E as in ERISA Posted March 19, 2003 Posted March 19, 2003 No corporate level taxation. The income is reported at the shareholder level. Example: C-Corp has $100 of income. Pays $34 tax. Distributes a $66 dividend to shareholder. Shareholder pays $24 tax. Shareholder ends up with $42. S-Corp has $100 of income. Pays no taxs. Reports the $100 to shareholder. Shareholder pays $36 tax. Shareholder ends up with $64. Of course, it is much more complex than this. But that will give you the basic idea.
Mary Kay Foss Posted March 20, 2003 Posted March 20, 2003 In addition, losses can be passed through to the shareholders' personal returns. Many corporations start as S corporations to deduct losses in the early years and become C corporations when they are retaining income to fund expansion. Mary Kay Foss CPA
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