Are you thinking about an S-Corporation for your new San Diego business? What is the difference between all of the corporate entity options for your new San Diego business, and why might an S-Corporation be the best alternative for your new venture? The Watkins Firm provides sound business counsel informed by our decades of service to the San Diego business community.
Tax Advantages
One of the reasons for thinking about an S Corporation for your San Diego business is taxation. The election of an “S-Corporation” specifically relates to your tax status. In a C Corporation profits are taxed at both a corporate and individual level. In an S Corporation, the entity is a “pass-through” tax entity, and you only have to pay taxes on an individual basis. There are different tax rates for “salaried” income versus “distributions” (which are taxed at a lower rate), and this is a primary benefit of an S Corporation, especially to high wage earners. Recent tax law changes have created genuine advantages for S Corporation owners.
Limitations When Thinking About an S Corporation for Your San Diego Business
There are limitations when thinking about an S Corporation such as it must remain a domestic business and have less than 100 shareholders. There are still requirements regarding annual meetings and compliance issues that must be maintained to protect the integrity of the S-Corporation’s corporate veil.
The S Corporation election must be taken within the first two months of the tax year annually and must be reaffirmed each year the company is in business. There are advantages to an S Corporation over a C Corporation or LLC. There are also disadvantages for many. It is important to make informed business decisions when selecting your entity and forming your corporate documents.
If you are thinking about an S Corporation your new San Diego business the Watkins Firm can help. We have served the San Diego business and healthcare communities for more than 40 years. What are the advantages of an S Corporation versus a C Corporation or LLC? If you are in a medical practice or healthcare business you will want to give consideration to a California Professional Corporation and/or a Management Service Organization or MSO.
We invite you to review our Podcast Episode 2 – Starting a Business and the strong recommendations of our clients and contact the experienced corporate formation attorneys at the Watkins Firm or call today for a free and substantive consultation at 858-535-1511. Draw on our decades of experience and service to the San Diego business community. We will help you to avoid the pitfalls that disrupt other businesses and build a solid business foundation for the future.
