Episode 3: Understanding S-Corp Elections

In this episode we discuss the intricacies of entity election, specifically focusing on the option for LLCs to choose S-corporation taxation. Contrary to common misconceptions, being an LLC doesn't automatically make a business an S-Corp for tax purposes. The episode highlights the benefits of opting for S-Corporation status, such as shifting from self-employment taxes and the potential for tax-free distributions after reasonable compensation is paid out. We also focus on the challenges, including compliance costs and underscore the importance of considering factors like reasonable compensation, business model, and compliance costs versus tax savings.

T&O Strategic Advisory