How is filing as an S Corp or LLC or Sole Proprietorship differ on my tax return? Plattsmouth, NE
That is a loaded question and I highly suggest consulting a tax advisor concerning your specific tax situation. Most of the difference revolves around labor cost and owner’s compensation. Tax liability and tax laws have a tendency to change on an annual basis and each year seems to differ in the percentage, deductions, and credits. Essentially filing as an S Corp allows you to W2 yourself as an employee. The business’s corporate tax returns will also be generated in a completely separate return. This requires both your business and you personally to pay FICA and MEDICARE through a deduction on your personal paystub. Therefore, you may be listed as an employee and as an equity holder owner but the tax liability may differ depending on the amount and earnings of the business and your personal income. Beyond that, the difference is minor. The Schedule C on your personal tax return will allow you to itemize all expenses related to the business whether you are an LLC or Sole Proprietorship.