Expert: Gerard L. Samoleski, CPA* - 9/1/2007

Question
My CPA  recommend me change my solo to s corp for tax benefit.
My three years old solo dental office produce 220k to 280k average with profit 70k -100k. my staff is my wife and three part time staff. My friend told me it almost the same as for the tax benefit unless the profit is more than 200-300k. Should I change to s corp?
Thank you in advance.

Answer
Sam:

Changing to an S Corp has many advantages over a sole proprietorship.  The primary tax advantage is that the earnings are not taxed for self-employment taxes as they are subject to as a sole propietorship.  

Additionally, you will have the benefit of a corporate veil for liability purposes.  

The primary drawback it the extra tax returns that have to be filed and the cost along with it.  However, the offset from the self-employment tax reduction will likely be a much bigger gain than the costs of tax preparation.

I hope this helps.

Gerard