Updated July 28, 2015
Close Corporation Tax Planning Chicago Illinois
The main concept here is generally having the correct type of taxation structure, and a knowledgeable accountant doing the books so that the client pays the least amount of tax legally.
LLC’s and LLP’s are fantastic from a legal liability standpoint. But if you are talking about an active trade or business, rather than a passive real estate type enterprise, the taxes can be high. The owners will pay both income and payroll taxes on the income. These are pass through entities. The income is generally treated the same way as that of a sole proprietorship.
Regular or C-Corp income can also be expensive. Income is taxed twice in these entities at the Federal Level. The corporation pays its own income tax. When the owner of the corporation takes that money out of the corporation, they pay income taxes on the same money a second time.
S-Corps, on the other hand, only pay income taxes once at the Federal Level. Any income on an S-Corp is passed through to the owner of the S-Corp and paid on the 1040. If there is a loss, then that is passed through as well. If the owner has basis, then that loss may be deductible from the personal income tax. More importantly, there are no payroll taxes on the income passed through to the owner on this type of entity.
If you are having problems with your Close Corporation Tax Planning Chicago Illinois or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
Chris@AccountingSolutionsltd.com
Additional Accounting Articles and information on my firm can be found at
www.AccountingSolutionsLtd.com
Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.