Is an S corporation or a C corporation better for your business? Dr. Friday explains the pros, cons, and tax implications of each.
Transcript
G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment.
I had a conversation the other day with a client about keeping his business either as a sub-S corporation, which is a pass-through, or a C corporation. Because the top rate for an individual could be 37% and a corporation is 21%. Sounds great.
But then when you take money out of that corporation, you’re still paying tax on the profits if you’re getting a distribution. So you need to sit down and really do the math.
Either you’re gonna be drawing out all the money through payroll, which again you’re gonna have to pay the tax rate on that at 37% if your income’s that high, or you’re gonna have to figure out if there’s a better way of doing the distributions.
Call us 615-367-0819.
You can catch the Dr. Friday Call-in Show live every Saturday afternoon from 2 to 3 p.m. right here on 99.7 WTN.