Just A Reminder For Those Of You That Actually Pay Taxes :)

MrYum · 2005-01-17, 09:52 PM

That's the beauty of an S Corp.

The corporation shows 0 profit for federal taxes at year end.

All 'profit' is distributed to corporate share holders (me) via a K-1 form for tax purposes. I then pay taxes on those profits at whatever my personal tax rate is...the corporation pays none. This avoids the double taxation issue of owning/being a corporation.

The downside is I personally have to pay taxes on those corporate profits...even if I don't draw them out of the corporation. The profits only flow to me on paper in that respect.

That's not to say you can't draw out those profits, but you pay taxes on that money either way.

2005-01-17, 09:52 PM	#1
MrYum Arghhhh...submit yer sites ya ruddy swabs! Join Date: May 2004 Location: Sunny Florida! Posts: 5,108	That's the beauty of an S Corp. The corporation shows 0 profit for federal taxes at year end. All 'profit' is distributed to corporate share holders (me) via a K-1 form for tax purposes. I then pay taxes on those profits at whatever my personal tax rate is...the corporation pays none. This avoids the double taxation issue of owning/being a corporation. The downside is I personally have to pay taxes on those corporate profits...even if I don't draw them out of the corporation. The profits only flow to me on paper in that respect. That's not to say you can't draw out those profits, but you pay taxes on that money either way.