Читать книгу Financial Accounting For Dummies - Maire Loughran - Страница 63

I compare the S Corporation business entity to my small business clients as a revved up sole proprietorship. For a single person, S Corporation day-to-day operations are pretty much the same as a proprietorship with the following exceptions:

 You, as the owner, are paid like a regular employee, not by draw. This brings into play all the employment tax filing requirements such as making tax deposits and giving yourself a W-2 at year end.

 Generally, you’ll have limited liability for the debits of the S Corporation.

Unlike a sole proprietorship, an S Corporation is separate and distinct from you, the owner/shareholder. With very few exceptions, you, as the owner of the S Corporation, are not personally responsible for any actions taken by the business. Hands down, I consider this a biggest advantage to taking the time and money to operate as an S Corporation.

The owner of an S Corporation is the shareholder. What that means is that after you follow the steps in your state to establish the business, you purchase shares of stock from the business to stake your ownership. Chapter 9 gives some fantastic info on this type of accounting transaction, which, by the way, you will be tested on in your financial accounting course!

Okay, so limited liability sounds good but wondering what the tax bite is for an S Corporation? Like a sole proprietorship, the income or loss from the business flows through to the shareholder’s tax return. Most of my small business S Corporation shareholders are husband and wife filing a joint Form 1040. So, the income from the business is taxed at the same federal rate as W-2s, interest and dividend income on that return.

I’ve condensed information about S Corporations to just what you need to know for your financial accounting course and to offer it as an business entity option should you be a budding small business owner reading this book. A great resource on the topic is Starting a Business All-In-One For Dummies (Wiley) by Kenneth W. Boyd, Lita Epstein, Mark P. Holtzman, Frimette Kass-Shraibman, and finally me — Maire Loughran.