jordan pas cher Terrible Tax Mistakes for S Corpor

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According to the [url=http://www.hightaste.net/?page_id=234#comment-316798]Cialis vs. Viagra - Which one you should choose - written by sally gomes[/url] Internal Revenue Service, S corporations now outnumber regular corporations and more than 350,000 new S corporations appear each year.
The popularity of Subchapter S corporations shouldn't really surprise people, however. S corporations provide two big tax savings to small [url=http://www.footdedemain.fr]jordan pas cher[/url] business owners. First, they typically don't pay federal or state corporate income taxes.
And, second, S corporations often minimize the payroll taxes that S corporation shareholder-employees pay because only amounts the corporation designates as wages get taxed for Social Security and Medicare tax purposes. Unfortunately, S corporation owners make some common tax blunders--blunders that can destroy or delay the tax savings the S corporation option should deliver.
Blunder 1: Late Sub S Elections
The first blunder? Thinking you can make the S election at the end of the year. An S election needs to be made early in the year or before the year even starts in order to be effective for the year. Specifically, you should make the S election either before the year starts or within 75 days after the start of the new year.
For a business whose tax year begins on January 1, the election needs to be made by March 15. If a new business begins life mid-year on, say, May 23, the 75-day counter starts ticking down from that date.
Note: The IRS does provide a mulligan for people who miss the election deadline. Taking this [url=http://www.mxitcms.com/abercrombie/]abercrombie[/url] mulligan, however, requires that you strictly follow some "late S election [url=http://www.svrt.fr]Doudoune Moncler Pas Cher[/url] relief" procedures. Accordingly, you probably want to get a CPA's help with this.
Blunder 2: Forgetting Shareholder-employee Payroll
When you make a successful S election, the Internal Revenue Service sends your business an approval letter. That letter uses scary--almost threatening language--warning you to pay [url=http://www.technick.fr]hollister[/url] reasonable compensation to shareholder-employees.
Despite the warning, S corporations commonly forget to do the formal payroll thing--including regular payroll checks [url=http://www.villacannizzo.it/category/hogan-outlet-milano]hogan outlet[/url] and tax deposits, quarterly payroll tax returns, and year-end W-2s. That's often a huge mistake.
If you don't do payroll, the IRS will catch up with you. At that point, the IRS will re-categorize all of the shareholder-employee draws as wages. This re-categorization may trigger thousands of dollars of back taxes, penalties and interest for each year and for each shareholder-employee for whom you forgot to do payroll.
Accordingly, you got to do payroll. Period.
Blunder 3: Bad Borrowing Habits
Ironically, your bank often helps you make another common S corporation tax blunder: The bank will loan you money to buy some piece of equipment--or perhaps a business vehicle.
But--and here's the mistake--the bank often loans the money to your S corporation. Instead, the bank should loan the money to you personally and you should then re-loan the money to your S corporation.
An awkward problem exists when a business loan gets used to fund an S corporation purchase. You only get to write off the purchase price of the business asset if you have at least that much basis [url=http://www.pollinate.it]moncler outlet online[/url] in the S corporation. Yet you only get basis from money you've personally invested in or personally loaned to the corporation.
You don't get basis from a loan made to your S corporation for, say, a [url=http://www.lotogame.fr/louboutin-pas-cher/]louboutin[/url] new delivery vehicle purchased for the business. Without basis, you often won't be able to deduct the purchase on your tax return.
This S corporation tax mistake gets made all the time--often when S corporation owners are making last minute, year-end asset purchases to drive down their income.
Fortunately, you can solve the problem pretty easily. Make sure you directly borrow the money for asset purchases and then do a back-to-back loan [url=http://www.piaolemei.com/home.php?mod=space&uid=58441][/url] to your corporation.
This back-to-back loan [url=http://www.batfriendtrust.it]hogan outlet[/url] shouldn't increase your risks. You'll probably have to personally guarantee the loan anyway, right?
Blunder 4: Triggering the BIG Tax
Typically, S corporations don't pay federal income taxes. That's a huge part of the attraction. However, two common exceptions to this general rule exist for S corporations previously operated as regular C corporations.
The first exception? The "built-in gain" or BIG tax. It applies to profits recognized by the S corporation but stemming from the time when the corporation operated as a C corporation.
The details of the built-in gain tax get boringly tedious. But logic is really simple. If you would have paid tax on some income or gain had you still been a regular C corporation and that income or gain was already "locked in" at the point you converted from a C corporation to an S corporation, the old C corporation tax (35% of profits) still applies.
The moral: You need to be really careful if you convert to S corp status after operating as a C corporation. Make sure your accountant understands and helps you minimize the BIG tax.
Blunder 5: Passive Income Excesses
Another tax blunder threatens S corporations previously operated as C corporations, too.
If an S corporation profitably operated as a C corporation [url=http://www.riad-marrakesh.fr]abercrombie pas cher[/url] and has retained some of [url=http://www.chu-forex.fr/hollister.php]hollister france[/url] those profits, passive income (interest, rents, dividends and so forth) gets taxed when it exceeds 25% of gross receipts.
This [url=http://www.renaissancedestoiles.fr]louboutin[/url] "too much passive income" problem may sound only theoretical. But it occurs regularly with old S corporations being wound down by the owners--say for retirement.
If an S corporation that used to be a C corporation metamorphoses from an operating company to an investment company, at some point, the S corporation may pay [url=http://www.mquin.com/pjsdoudoune.php]doudoune parajumpers[/url] corporate income taxes.
If that isn't bad enough, yet another problem exists with turning an S [url=http://www.accrh.fr]doudoune moncler[/url] corporation that used to be a C corporation into an investment holding company. If the passive income crosses over the 25% threshold for three years in a row, the S corporation status terminates.
Because of the taxes on excessive passive income and the risk of losing S status, avoid or minimize passive income within an S corporation that previously operated as a C corporation. One easy way to do this [url=http://wordpress.digitalnature.ro/mystique#comment-407004]Nurse Practitioner Jobs And Where To Get Them - written by Vikram Kumar[/url] is to distribute profits to shareholders rather than reinvest them.
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Terrible Tax Mistakes for S CorporationsArticle Summary: S corporations have become the most popular type of corporation in the county--which isn't surprising. An S corporation can save its owners tens of thousands of dollars in taxes each year. To reap those savings, however, the small business needs to avoid these five common S corporation tax blunders.
Bestselling author &amp; accountant Steve Nelson also teaches S corporation tax law at Golden Gate University and edits the S corporation and limited liability company web sites.

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