Finance & Enjoyment Blog

If you are an owner in an S-Corporation and in a high tax bracket, it may be a smart tax strategy for you to switch to a C-Corporation. In an S-Corp, income from the business flows through to the owners who then taxed at this income at their marginal rates which could be as high as 35%. A C-Corp on the other hand pays taxes at the corporate level which can range anywhere between 15% and 35%, but more deductions are allowed which lower taxable income. Also, the C-Corp will pay the owners dividends instead of disbursements, and these dividends are taxed at 15%. In many cases, it is found that the lower corporate rate combined with the low dividend rate is still less than the 35% the owner of an S-Corp would pay.

Posted in Successful Practice Management »

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