Lot's of Small Corporations are upset about a proposed tax which is being unofficially dubbed as the "John Edwards loophole." John Edward's own S-Corporation paid him a $360,000 salary which was not exempt from employment taxes, but he took an extra $26 million from the s-corporation which was taxed yet because of a loophole he was not taxed the employment tax on the income. The proposed tax would tax all s-corporation profits, which has many s-corporation owners upset, as they feel that if the tax proposal is passed they will be punished for something they didn't do. Many s-corporations put all profits back into the business and the tax will cut into those profits. If you want to learn more about about s corporations visit our site or call us at 866-999-8200.
April 15th might have some people running to the post office by midnight to file their returns, for others it's a day of free treats. In honor of tax day many businesses are giving out discounts or free products.
Here's a list of some of the best freebies:
- Starbucks is giving away free coffee as long as you bring in your own mug.
- Sign up at Del Taco and get a free taco today.
- Jack in the Box is giving out free french fries.
- Banana Republic online is giving 25% off your entire order with the coupon code "taxbreak25"
- Subway is giving away cookies!
If you're around any of these establishments, check them out!
One of the advantages of a LLC is that it has pass through taxation. What pass through taxation refers to is the tax structure for LLC's and Scorps. Pass through taxation allows the owners of the LLC's to have the LLC's profits "pass through" the LLC and report the income of the LLC on the individual's taxes. The benefit to this tax structure is that the LLC doesn't have have "double taxation" as with corporations.
In comparison with a C corporation, the corporation pays a tax and any profits distrubuted to the shareholders is taxed again. In essence it is double taxation. However, for corporations, you do have the opportunity to file a Scorp filing with the IRS to change the tax structure of the corporation to mimic the same tax structure of the LLC. However, the penalty of filing the S corp with the IRS is that you limit the growth of the company to a maximum of 75 shareholders. This limit is not an issue as most family run corporations will never have more than 75 shareholders. As the company grows bigger and needs more capital, it may change the tax structure back to a C corp to raise more capital by selling shares to investors.
The LLC is very advantageous for many small business because of the tax structure and liability protection. You can form a LLC today.