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14Dec 2022

Does California collect a tax from California S Corporations, in addition to the $800 minimum tax?

Surprise! The minimum annual $800 each corporation (and LLC) is required to pay to the California Franchise Tax Board (the FTB) is only a minimum, not a flat tax. S corporations in California (strictly speaking, every S corporation that has California source income) are required to remit 1.5% of their income to the FTB annually. The […]

10Aug 2020

Can partners in a partnership get a W-2 and be “treated like an employee” like they can in an S Corporation?

Short answer: No. Long answer. When you turn one of your employees into a partner, that individual will switch from receiving a W-2 to getting a Schedule K-1. If you want your “partners” to be treated like an employee, then an S Corporation is the preferred approach (after you’ve determined that a C Corporation is […]

27Feb 2020

Is my business big enough to justify the additional overhead of a corporation or LLC?

“Big” is a relative term. Size isn’t always the only, or even a significant, element to determining whether you should entity-ize your business. If you run a small business, but it’s a high-risk business, like, for example, a liquor store, then the overhead of an LLC or corporation is probably not only a good idea, but […]

27Feb 2020

What are the advantages of a C Corporation versus a sole proprietorship?

Short question . . . long answer. For the most part, the classic answer, which is also correct, is a C Corporation (or an S Corporation) provides limited liability for its owners and management. Either one could provide additional tax benefits. On a less obvious level, having your business in a corporation may provide it […]

02Sep 2020

What are the advantages of operating my business through an S Corporation?

Top three reasons: Tax. Tax. Tax. Which is why they were created to begin with back in the day (1958), to encourage small business creation in the U.S. An S Corporation has a “single layer” of tax, i.e., unlike C Corporations (which is what all corporations formed in the United States are unless they make […]

10Aug 2020

When should I use a C Corporation for my business?

It’s complicated. With a (currently) flat tax rate of 21%, many businesses are considering being a C Corporation. You may want to favor/explore being a C Corporation in these circumstances: You’re exploring providing your employees with fringe benefits; you’re planning on having your business retain its earnings for future growth; you’re considering venture capital; you […]

02Sep 2020

Why choose to operate my business through an LLC instead of an S Corporation?

If you want your business life to be simpler, LLCs are the way to go. Unlike a corporation (S Corporations and C Corporations are all corporations, right? Right!), LLCs in California don’t have a requirement to hold meetings or keep annual minutes, unless they agree to do so. LLCs are also automatically taxed as a […]

27Feb 2020

How long does it take to form a corporation or LLC in California? What about other states?

California varies – sometimes it’s a matter of days, but sometimes, especially at the beginning of the year, it can take a couple weeks. You can always submit your documents on a rush (24 hours or even same day) basis. Other states? It really depends. Delaware’s quick.

27Feb 2020

Will putting my business into a corporation or LLC help me save taxes?

It can, but not always. It’s not often the case that a business will put their business into an entity solely to save on taxes, although S Corporations for small businesses are frequently and legitimately used for that purpose.

25Feb 2020

How much additional overhead costs will I incur if I transfer my business into a Corporation?

In addition to the expenses you’ll incur for forming your corporation or LLC, there will be a number of expenses you should take into consideration when weighing the pros and cons of operating from an entity. Here’s a short list: an additional tax return (CPA fees), $800 minimum to the California Franchise Tax Board (regardless […]

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