It’s critical that small business owners and self-employed individuals seek out tax advisory when planning to open a new business. One of the primary benefits of working with CPA is that it can help businesses save money legally. By identifying and taking advantage and tax deductions, clients can reduce their tax liability and keep hard-earned income. This can be especially important for new businesses and self-employed individuals who are often faced with significant start-up costs.
Another important benefit of such an advisory is that it can help clients avoid costly mistakes. Tax laws and regulations can be complex and constantly changing and mistakes can result in penalties, fines, and even legal action The advisor can help clients stay compliant with tax laws and regulations and avoid costly mistakes that could negatively impact their business or personal finances.We strongly believe that tax advisory is an essential service that should be sought by anyone planning to open a new business or become self-employed. By working with a tax advisor clients can save money, avoid costly mistakes and make informed business decisions.

Making an S-Corp election can have significant benefits for small businesses, including pass-through taxation, reduction a chance of Audit, and increased compensation diversity. However, it also comes with additional costs and complexities, including increased paperwork and fees, limited flexibility, potential termination costs, and additional taxes on built-in gains. It’s important to carefully consider the pros and cons and consult with a tax professional or attorney before making the decision to elect S-Corp status.Some Benefits will include:Pass-through taxation: S-Corp status allows the business to avoid double taxation on profits. Instead, profits and losses are passed through to the shareholders’ personal tax returns, where they are taxed at individual tax rates.Separate Tax Filing: Unlike SM LLC the S-Corp. will be filed separately on Form 1120-S which no doubt adds filing complexity but at the same time reduces the chance of IRS audits. When IRS Audits your personal return, they will look over everything on the return including your LLC. With the S-corp. election you’re splitting your income tax filing between personal and business which significantly drops the chance of business audit.

Diversified Compensation: As an owner of an S-Corp. you will have 4 different ways to pull funds out of your business (reimbursement, W-2 compensation, shareholder distribution, loan repayment) and depending on circumstances some will be more beneficial than others

Professional image: Electing S-Corp status can help create a more professional image for the business and may help it to be taken more seriously by customers, suppliers, and lenders.

Some Costs will include:

Increased complexity: S-Corps are subject to additional rules and regulations, including strict ownership requirements and restrictions on the types of shareholders allowed.

Additional paperwork and record-keeping: S-Corps are required to file annual tax returns, maintain detailed records, and follow specific corporate formalities, which can be time-consuming and costly.

Additional fees: S-Corps may be required to pay additional state fees, including an annual franchise tax in some states.

Limited flexibility: S-Corps are subject to strict rules regarding the allocation of profits and losses, which may limit the flexibility of the business.

Termination costs: If an S-Corp status is terminated, the business may be subject to additional taxes and penalties, including a built-in gains tax on appreciated assets.