I own a small business that earns around 25000 per year. I am the only person in this business doing real estate and interior design. Does it make financial sense to file as a corporation or just as an LLC, sole proprietor or something else?
Thanks
It's not a simple choice, and you should consult a local professional for assistance. In the meantime, you can review the IRS rules for Business Structures here.
Thanks, I have elected and been filing as a corporation, both S and C at different times for several years. I'm just not sure its worth the effort or expense anymore.
If you elected to file as a corporation, you can't change from year to year whether it's an S or a C. You have to stay with whatever one you elected. If you elected C Corp; you have to file Form 1120....until and if such time you file the necessary paperwork to elect S Corp status. If and when you do that, you have to file Form 1120S until the election is made to terminate S status. And there can be tax consequences to that. But you cannot go back and forth year to year.
Also, if you liquidate the corporation, there are tax consequences in the liquidation of a corporation.
OK, thanks. I'm going to talk to a tax pro to see what would work best for me. I appreciate your help.