Accountants Who Come To Us For Guidance
David M. Kaufmann, CPA
2831 Wyecliff Way
Highlands Ranch, CO 80126
PO Box 632285
Highlands Ranch, CO 80163-2285
A client starts a new business. Sales might exceed
$1,000,000 at the end of the second year. The business has a slim profit margin.
The client wants my help with an S Corporation that he
wants to form.
The client wants to keep most of the income in the
business to boost growth. If the client uses an S Corp, the S Corp's income will
be taxed on his Form 1040, but the S Corp will not be distributing him any cash.
He will not be able to pay his taxes on April 15.
The corporation should be a C Corporation. For low levels
of income, the corporation is taxed at a very low rate. Distributions to the
shareholder can be in the form of dividends that are only taxed at 15%.
LLC? Using an LLC is not a tax decision. Single member LLCs
can be either taxed as Schedule Cs (sole proprietorships), C Corporations or S
This is a complicated decision. Tax professionals often use
software like the
C Vs. S
Corporation Analyzer or the
Corporation Vs Partnership/LLC/Sole Proprietorship Analyzer.