|Small Business Information|
S Corporation ? What Is It?
For many small businesses, the "S" corporation is the business entity of choice. The "S" in S corporation refers to a tax designation. All corporations are created the same way under state law. A small business must then chose a tax status, to wit, "C", "S" or non-profit. Important issues concerning S corporations are covered in this article.
C Corporation v. S Corporation
Federal tax laws automatically consider every corporation to be a "C" designation. A small business, however, may elect to be designated as an "S" corporation by filing IRS form 2553. The election must be made prior to the tax year in which it is going to be effective. All shareholders must sign the election.
A C corporation stands alone for tax purposes. It must file tax returns and pay taxes on profits. Profits and losses are reported on the corporate tax return and do not pass through to shareholders. C corporations can elect any calendar month as the end of their fiscal year.
An S corporation is a pass through entity for tax purposes. It does not file a tax return for the purpose of paying taxes, but does file information returns. All profits and losses are passed through to the shareholders. In turn, each shareholder reports the profit or loss on his or her individual tax returns in proportion to their ownership interest. For instance, if you own 30% of the total issued shares, 30% of the profits or losses must be reported on your personal tax returns. S corporations must have a fiscal year-end of December 31. If you intend to eventually take your business public, you cannot use an S corporation.
Although S corporations are a tax choice, there are limitations on what corporate entities can make the election. The biggest hurdles are:
1. There can be no more than 75 shareholders;
2. Each shareholder must be a person, not a business entity; and
3. There can be only one class of stock.
While S corporations provide relief from the tax filings of a C corporation, there are negative aspects to using them. Simply put, a C corporation can write off more expenses. S corporations may not be able to deduct certain types of insurance and costs of doing business. The list is fairly complicated, so you should speak with a tax professional prior to deciding which designation works for your business.
S Corporation vs. Limited Liability Company
S corporations have a definite tax advantage over limited liability companies ["LLC"]. Distributions from LLCs to shareholders are subject to self-employment tax [15.2 percent] in their entirety. Distributions from S corporations, however, can be broken down into two categories, salaries and dividends. The dividend distributions are not subject to the self-employment tax. Avoiding self-employment tax can make a substantial difference in the amount of money you take home.
I always laugh when someone emphatically says that every business should be formed as a particular entity. Such statements are simply wrong. The "best" business entity depends entirely on the nature of your business. In many instances, S corporations are ideal.
Richard Chapo, Esq., is a business lawyer with http://www.sandiegobusinesslawfirm.com - offering legal advice to San Diego businesses. This article is for general education purposes and does not address every facet of the subject matter. Nothing in this article creates an attorney-client relationship.
Change May Be Your Ace in the Hole
Whether it has been thrust upon you by external market forces or it has simply bubbled up from the internal dynamics of your enterprise, change itself always presents opportunity for improvement. And in a knowledge based economy, change may be the only thing we can count on as small business people. So, if you want to stay ahead of the curve, you must embrace change as a necessary strategy for commercial success.
Increase Productivity and Business Success - Take Responsibility
Are you responsible for your results?
Serious About Writing A Business Plan... Start A Business Plan Library
Tap these treasures of ideas. The best money you can spend is money invested in your business plan education. Don't shortchange yourself when it comes to investing in your dream. Start gathering samples of business plans and collect business plan books and get a business plan library started, it can change your future. Here's what your library needs to show: that you're a serious student of business strategy and planning, finance and economics, selling, and writing.
An observation while returning home from a seminar: Getting away from the everyday allows room for analysis and new thoughts. Stimulation while away from the everyday energizes analytical and concept ional thinking.
Franchisor; Ongoing Support and Ideas
Ongoing support for a franchise system is omnipotent. A major part of any family relationship is communication. A large franchise system is similar to a giant family; it needs constant communication. By providing on going support for your franchisees, we will guarantee both success and open communication lines will strengthen you company and team in the market place. Some things, which many franchisors do not do or do not do enough are little things which are really low cost and simple. For instance sending out sales tapes.
Small Business Newsletter Dilemma: Which Day Do I Send?
If you're just ramping up your small business email newsletter, you might be wondering what day you should send it to your opt-in list. After all, you want it to get opened and read and you know your prospects may be weeding through a ton of email clutter. What to do?
Small Business Success: Thriving During Change (And Landing On Your Feet!)
If I had $1.00 every time I heard someone say " I don't like change or, change makes me uncomfortable" I'd be a millionaire. Some people thrive on change ? they love it and even create more of it. Others view change with anxiety and resistance. So often, we don't associate potential, excitement and wonder with change. Instead, we react to it; we try to control it; we create situations and problems to avoid dealing with it. We experience change daily in many forms ? the clothes we wear, the food we eat, the conversations we have, traffic patterns, the WEATHER.
Keep TRACK of your Business Relationships and Gain Profits
How do you know when an alliance needs to be monitored and tracked?
Don?t Wait for the Perfect Plan
1. Don't Spend Too Much Time Planning
Pressure Washing; How to Bid Concrete Cleaning Jobs
Remember the cleaning business is all about time ratio to money. You want to be making at least a $1 a minute when doing concrete work at a minimum and aim for $100 to $200 per hour if you can get it. If you are not achieving this income level then you work too slowly or you did not bid correctly on the accounts you are taking. You need to have a work order form. This form should have an area for time it took to do the job, how many people were on the job, gas to get to the site and mileage to get to the site. If you need a sheet like this the trainers we believe the best program to create this in is the new Microsoft Word, it has some incredible new features which make the formatting so easy you might think of yourself as a graphic designer.
What To Consider Before Buying A Franchise
Here are some useful tips on what to consider before buying a franchise. Before investing in any franchise system, be sure to get a copy of the franchisor's disclosure document. Sometimes this document is called a Franchise Offering Circular. You should read the entire disclosure document.
New Habits, Rebounding Economy Help To Sell Giftware and Collectibles
Just a few years ago, when one thought of a home-based sales business, Tupperware, Avon and a host of multi-level marketing schemes might have come to mind. Today, however, changing market conditions and evolving consumer habits have converged to make home-based selling businesses a realistic opportunity with real profit potential.
Quality Controls for Franchising Companies Sample Outline
Quality control in franchising companies is paramount and all franchising companies must have strict guidelines to insure consistency. To insure this takes place throughout your franchise system you must make this a policy in your confidential operations manual. Your first step should be to make an outline of your policies and reasons behind them, since you might need help getting started please feel free to print this article and modify the outline below to best fit your specific business and vision for your company.
Procrastinate Your Way To A Successful Small Business
What will your business look like a year from today?
Asking the RIGHT Questions
Which questions do you need to ask to even get a hint if you really want to know something about another person's business pain?
Your Practice is Only as Valuable as Your Referral Base
Many physical therapists in private practice have the appearance of a very successful business that is built on the backs of about four to five doctors. Now if anything would happen to any of these guys, the value of these practices would drop markedly. How can you run a practice for many years and then take a good look at it and realize that you have five doctors that represent more than 50% of the referral base? Exactly how can that happen?
How to Handle Rejection When You Start an Office Cleaning Business
"If at first you don't succeed, then skydiving definitely isn't for you."
Carwash Manual Sample Outline
Car wash businesses are unique to other businesses. In fact they are about as unique as the many different type of vehicles one is asked to wash. Many vehicles are best cleaned using slightly different techniques. If you own a carwash or a mobile car wash you will need an operations manual to assist your managers in staying efficient.
Canon City, Colorado - Good for Small Business
Canon City, Colorado is known for it's 6 Prisons; State and Federal, women's prison and juvenile. It is also home to the First Colorado Territorial Prison. Pictured here. Most of the people work for the prison system and it is the main employer of the town. This helps the local business community with high paying jobs. The small town has 7 new car dealerships and six used dealerships. Canon City is surrounded by several other smaller towns, which add quite a bit of people to the area.
Dig Deep for Small Business Ideas Before You Start the Wrong Business
If you're serious about wanting to start a business, the first thing you want to do is take the time to understand what really makes you tick. Where do you get your drive? What gets you in a "zone?"
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