A Pro’s Guide to Understanding S-Corp Taxes!
Are you a business owner considering forming an S-Corp?
In this video, the XQ CPA team breaks down one of the most important things you need to know about S-Corps: what your tax obligations will be.
S-Corporations are often used by business owners specifically for their tax advantages as unlike C-Corporations, S-Corps are not subject to double taxation. The benefits of S-Corps don’t end there! If you run an LLC your entire income will be subject to self-employment tax, but S-Corps are only required to pay FICA taxes on salaries and so long as reasonable salaries are paid, distributions can be made that are not subject to FICA taxes.
The major taxes you will have to pay as an S-Corp are Form 1120S Income tax, payroll taxes with forms W-2, W3, 940, and 941. You should also check if your state requires unemployment tax.