That’s the S for Savings…

What does the S in S Corp stand for? It refers to Subchapter S of the Internal Revenue Code which contains the rules that allow for the existence of this type of business entity. My clients know it also stands for Savings.

Following my advice one of my clients in a personal service business recently converted his business to an S Corporation. The reasonable compensation for his profession in this geographic region is about $85,000 per year. His business, on average generates a net income of about $100,000. By switching from an LLC (Limited Liability Company)to an S Corporation he will legally save about $2,300 per year in self employment taxes, much more than the slight increase in the cost of administering the S corporation.

If your business is currently set up as a traditional corporation, partnership, LLC or sole proprietorship you should consider switching to an S corporation. Call me at 678 624 4775 or send an email to me so we can explore if there is a benefit to making the switch.

Remember at Tarantino & Co CPA also stands for Close Personal Attention.