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Entity Classification: Exploring the Benefits and Risks of S Corps - Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent - Episode # 129
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What are the tax advantages and compliance challenges of switching to an S Corporation, and how can business owners decide if it's the right move for their company?
This week on Mission to Grow, Mike Vannoy sits down with Jason Blumer, CEO of Blummer & Associates, for an insightful discussion on S Corporations. Together, they explore the advantages of S Corp classification, including significant tax savings, while unpacking the complexities of compliance, payroll, and legal considerations. Whether you're an entrepreneur weighing the shift from an LLC or a sole proprietorship, or a small business owner striving to optimize your tax strategy, this episode is brimming with expert advice and practical tips to help you make informed decisions. Don’t miss this deep dive into the world of S Corps!
Takeaways:
- Assess your business profits to determine if you're consistently gaining above $80,000 to $100,000 annually. This is crucial for considering more strategic tax classifications.
- If your profits are within the suggested range, consult with your accountant to elect your business as an S Corporation (S Corp) to gain significant tax benefits.
- Establish a payroll system, ensuring you pay yourself a reasonable salary as mandated by the IRS. This action can reduce your tax burden significantly.
- Engage professional services for payroll, accounting, and tax filings. Avoid handling these complexities on your own to prevent costly mistakes and ensure compliance.
- Learn the difference between legal entity formations (LLC, corporation) and their tax classifications (S Corp, C Corp, Schedule C) to make informed decisions for your business structure.
- Continuously monitor your business’s profitability to ensure you are optimizing your tax strategy yearly. This might involve readjusting payroll or exploring additional savings opportunities in your operations.
Quote of the Show:
- " You want to get into an entity that's actually going to be best for you and very tax efficient, and lets you think about growing from there." - Jason Blumer
Links:
- Website: https://blumercpas.com/who-we-are/jason-blumer/
- Jason’s LinkedIn: https://www.linkedin.com/in/jasonblumer/
Ways to Tune In:
- Spotify: https://open.spotify.com/show/2XThTdn7YC1lkAm0PgZUkj
- Apple Podcasts: https://podcasts.apple.com/us/podcast/mission-to-grow-a-small-business-guide-to-cash-compliance-and-the-war-for-talent/id1725890976
- Amazon Music: https://music.amazon.com/podcasts/328dddd0-3c4f-4b07-a0d3-13bdcb418486/mission-to-grow-a-small-business-guide-to-cash-compliance-and-the-war-for-talent?refMarker=null
- Audible: https://www.audible.com/pd/Mission-to-Grow-A-Small-Business-Guide-to-Cash-Compliance-and-the-War-for-Talent-Podcast/B0CS71KQFM?qid=1706208857&sr=1-1&ref_pageloadid=not_applicable&ref=a_search_c3_lProduct_1_1&pf_rd_p=83218cca-c308-412f-bfcf-90198b687a2f&pf_rd_r=A1ME8MBECSVZ6K4D7CNT&pageLoadId=QBtg12mqKsuZPLGY&creativeId=0d6f6720-f41c-457e-a42b-8c8dceb62f2c
- Podchaser: https://www.podchaser.com/podcasts/mission-to-grow-a-small-busine-5591006
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