An S-corp may offer tax savings compared to other business structures, but it has restrictions, such as only being available to U.S. citizens and resident aliens, and it limits the number of shareholders to 75.
Determining If an S-Corp is Right for You
Whether an S-corp makes sense depends on your situation. Consider your expected income and expenses and compare possible tax savings to the costs of running the S-corp. For those with lower or uncertain income, an LLC may be more suited. If your income gets high enough, an S-corp could provide greater tax advantages.
Financial Threshold for S-Corp Benefits
At what income level is an S Corp worth it? This question is complex and specific to your financial situation. It’s best to speak to an accountant to analyze the particulars of your case. If you’re just starting out with an uncertain income, it may be advisable to wait on filing as an S-corp and revisit the decision later when your income grows.