The deadline for S Corporations to file (if you filed a six month extension back in March) is September 15th, 2022. But don’t worry, that is plenty of time to get your S Corporation tax return done!
Electing to have your small business file as an S Corp is one of the top tax savings strategies that small business owners can use because the shareholders (owners) of the business can save thousands on FICA taxes. S Corps are commonly known as “pass-through” entities because they pass their profits (and losses) onto the shareholders. Owners are paid a normal salary just like wage earners (subject to FICA taxes), but also receive distributions that aren’t subject to FICA (self-employment) taxes. You should work with your accountant (*cough cough*) to determine what your salary should be, but in doing so you’ll be able to legally potentially save thousands of dollars just by converting your business to an S Corp.
When is the right time to convert your sole-proprietorship (Schedule C) to an S Corp? Well, it depends! Typically we advise our clients to switch to being taxed as an S Corp if they have $30,000 or more in profit each year, but the situation varies. Your industry, current finances, goals, business structure, and more will determine whether it makes sense for you to file as an S Corp, and your tax professional (*cough cough, again*) will help you navigate those waters.
Here at Havig Tax & Consulting, we love helping small business owners reduce their tax liability as much as legally possible. Contact our office today to find out how we can help you save time and money filing your S Corporation tax returns.