Article: How To Save Taxes With An S Corporation
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How To Save Taxes With An S Corporation
Ever wondered why so many small businesses?more than 3,000,000 at last count?operate as an S corporation? Simple. An S corporation saves business owners big taxes in three separate ways:
First, as compared to regular corporations (sometimes called C corporations), S corporation owners can use the business?s losses incurred during the early lean years on the owner?s personal returns as deductions.
For example, suppose a new S corporation suffers a $20,000 loss its first year and that the corporation is equally owned by two shareholder-employees, Smith and Jones. Smith and Jones each get a $10,000 business deduction on their individual tax returns because of the S corporation loss. This $10,000 deduction might save them each as much as $4,000 in federal and stat...
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