Yesterday, we had a look at the limited liability company (LLC) option for your home business. (Disclosure: my home business is an LLC, and I love it.) Today, guided by a guest post by Taxgirl on Progblogger, we will continue the series with an S corporation.
S corporation
Like the other types of home business listed before, the S corporation is a pass through. The S corporation is another of the types of home business that is particularly popular, points out Taxgirl:
The S corporation is another special form of corporation that operates
like a C corporation but is taxed like a partnership. There are strict
limitations on the structure of an S corporation including the number
and types of shareholders.
An S corporation can be helpful if you are going to need additional employees and payroll. But it is also useful for freelancers — even those who employ themselves as their only "employee." However, if you slip up with procedure, you can lose your "S" status for 10 years — and that can have serious tax consequences.
Make sure you consult with a knowledgeable accountant or tax attorney before making a decision on this home business, or any of the other types of home business.
Leave a Reply