When does an S-corp actually start saving you money?
An S-corp election cuts self-employment tax but adds payroll, bookkeeping and filing costs. Most advice quotes the saving and skips the cost — so people elect too early and end up worse off.
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A - Elect S-corp treatment and you split it: you pay yourself a reasonable salary, which carries payroll tax, and take the rest as a distribution, which doesn't. Ishyingura ni% S Bya ku i.
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- A ISEGONDA The S-corp files its own (Form 1120-S), on top of your personal one.
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- Igihe cyarenze Vary enormously — California's $800 minimum franchise tax is a very different story from Texas's nothing.
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Gutangira BirenzehoIkindi
Estimates to help you plan — not tax or financial advice. Your own numbers will differ.