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LEGITIMATE business expenses are deductible regardless if you are sole proprietor (Schedule C) or corporation or Scorp. The difference is how the income is taxed and subsequently distributed to owners/shareholders. Single member LLC or sole proprietor is the most simplest form and the easiest to file. If you elect Scorp or corporation status, you will be treated as employee of your own corporation, which means payroll taxes and payroll returns, you will have to file corporate return as well as your personal return. If you elect Scorp, profit will not be taxed at corporate level, it will path through to you and included in your personal taxes. With corporation the profit will be taxed at corporate level and than dividends distributed to you will be taxed again on your personal return (double taxation). You can use Scorp loses to offset your other income, you cannot do that with Corporation. There are certain advantages and disadvantages with each of them.
If you are just starting now and you don't necessary need the corporate perks like profit sharing, a good choice is single member LLC. It will give you the liability protection of a corporation but at the same time will keep taxes and day to day finances management simple. Let me find a detailed comparison chart for you.
Here's a comprehensive chart of business entities: http://www.nolo.com/legal-encyclopedia/ways-to-organize-your-business-chart-30065.html
And here's another article about business structures:
I would strongly suggest to read some books, talk to an accountant or tax professional and educate yourself about the subject before electing to be taxed as corporation or scorp. Many people run into problems by electing corporate status without knowing the filing requirements and tax consequences of their election.
Let me know if you have any questions.
Path-trough entity means the PROFIT (after expenses) is transferred to you and taxed at your personal return, regardless if you leave it in corporation or actually take it out, take a distribution. You can only keep retained earnings if you select corporation, which means the profit will be taxed at corporate level. You can choose to take the distribution/dividend or keep it in corporation. You cannot deffer tax on the profits.
I am not sure what are you asking. You choose the business entity based on the type of business you are running, not based on your personal life needs or goals. If you are, for example selling/reselling items on Ebay or similar websites, you don't need a corporation, or even LLC. If you flip houses with or without a partner, you need certain level of limited liability protection, so LLC would be a good choice. If you plan to run multi thousand dollar shipping business with warehouses in several states, you would most likely want a corporation or scorp. Business entity alone is not a tax advantaged vehicle, it is the way you run the business that could be tax advantageous. You can get a pension plan through any of the business entities, if you want profit sharing, you will have to create a corporation (which also result in double taxation). There are advantages and disadvantages with every business entity but none will guarantee you steady growth or long term goals.
What kind of business do you have? What are you doing to generate income?
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