Do you know if it’s time for your business to be taxed as an S Corporation? Being taxed as an S corporation has many advantages, including tax-favorable characterization of income. It is advisable to choose S corporation status if your business qualifies and if after running the numbers, it makes sense to make the switch. This class goes in-depth and helps the viewer understand some of the advantages of electing S corporation status and whether or not it is right for your business. S corporation status is not right for everyone; is it right for you? Watch to find out.

If you are thinking about whether or not to run your business as an S corporation, then it is likely that you or someone else has advised you to do so. Before leaping into the world of subchapter S corporations, there are a series of questions that you should ask yourself -- like what type of company would I be leaving behind (C corporation, partnership, solopreneur, etc.)? How will this affect my taxation? What are some pros?

Taxes are the price we pay for living in a civilized society. Income tax, self-employment tax, inheritance tax, property tax, sales tax, capital gains tax are all the various types of taxes that exist today.

With so many taxes, it's essential to be aware of what they are and when to file and pay them. Understanding your tax obligations and the type of tax you are required to pay is the first step to financial success because the IRS won’t be breathing down your neck.

As self-employed beauty professionals, we cannot escape two types of tax: income tax and self-employment tax. Not planning or budgeting for self-employment tax is the number one reason business owners end up with a large tax bill at the end of the year.

In most cases, the owners of an S corporation are considered employees of the company and are required to pay themselves a salary. If you are an owner who is actively involved in the management of your S corporation, you are considered an employee of the corporation and will receive a W-2 salary from the corporation.

A sole proprietor is an individual with sole ownership of a business in the legal sense of the term. Their compensation for working in the business is in the form of a draw. An S-corp can also have only one owner (shareholder). An S-Corp owner typically receives two types of compensation: an S-Corp owner salary (this is required under the law), which is subject to payroll tax withholdings, and a K-1, which represents the shareholder's percentage of the S-Corp's profit distributed to shareholders. Self-employment taxes are not levied on this type of income. If you are considering switching from a sole proprietorship to S-corp status, you should understand the differences to make an informed decision.

In the United States, most business entities are not taxed at the business level. Instead, the income passes through to the owners/members/shareholder’s personal tax return. Having a clear understanding of how you are currently taxed and how you will be taxed as an S-corporation is vital to understanding whether you are ready to elect your business to be taxed as an S-corporation.

The answer to this question is almost always YES. Even if tax minimization is not your goal, there are other reasons why it is a good idea to register your business. If you do register your business, be careful that you do not “pierce the corporate veil.”

An S corporation is a business entity that has elected to pass its corporate income, losses, credits, and deductions to its shareholders for inclusion on their tax form. It is a domestic company that conducts business in its own country. This is the official definition of an S corporation. This lesson breaks the definition down in simple terms.

Electing S-corporation status can be the best thing you do for your business, provided it is a good fit. An S-Corporation is a hybrid between a regular corporation (C-corporation) and a pass-through entity. This means that the shareholders experience the best of both worlds from both a liability and a tax perspective. Because they have more oversight, S corporations aid in establishing a company's credibility.

Although electing to be taxed as an S-corporation and receiving permission from the IRS is a very low bar to meet, the IRS has certain expectations of S-corps that they do not negotiate. 1) The number of shareholders you are allowed to have, 2) the types of stock you are allowed to have and 3) paying yourself a reasonable salary. This lesson digs a little deeper into these IRS concerns.

Questions asked by stylists during the workshop.