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Question
Hello,

I am in the process of starting a business here in Florida.  I have been told an S-Corp is what I should put the business under.  I was told it was better than LLC.  I would like to know what forms I need to fill out each year to be in compliance for an S-corp.  How often am I suppose to do my taxes?  What is the benefits of an S-corp over a LLC? I have read it over and over, and need it in layman's terms please.  Thank you and Happy New Year!!!

Answer
Adreanna,

Thanks for your question.

The choice of entity is not cut and dried.  Many prefer the S Corp, others prefer a sole proprietorship, C Corp, or LLC.  It really depends on the nature of your business and what you want from your entity choice.  I personally prefer the LLC, as it provides liability protection without having to adhere to the formalities of a corporation (stockholder meetings and minutes, board of director meeting and minutes, etc).  

An S corp requires that you pay yourself a salary, but profits are not subject to social security and medicare.  You will pay income tax on the profits of the business, not on the non-salary distributions from the business.  With an LLC, all profits are subject to income tax and self-employment tax (SS and medicare).

With an LLC, you may make an election to be taxed as a sole proprietor (file a Schedule C), an S Corp (file an 1120S), or a C Corp (file an 1120).

You will file an annual return.  If you choose to be an S corp, you will need to file a Form 2553 for the S Corp election.

Hope this helps.  All of the ins and outs of the choice cannot be adequately covered in this volunteer forum, but these are some of the highlights.  I suggest you find a trusted business advisor and discuss your situation.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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