Sub-Chapter S Corporations
One often overlooked benefit of using a Subchapter S structure for a business is that income allocated to the Sub S shareholders through K-1's is not considered to be self employment income and therefore not subject to Social Security payroll taxes. However, wages (or W-2 income) are the basis for retirement plan contributions. Explore how to get the right combination of each to help you maximize the total return of your Subchapter S Corporation.
What is the definition of a Sub-chapter S Coporation?
A form of corporation that meets the IRS requirements to be taxed under Subchapter S of the Internal Revenue Code. This gives a corporation with 100 shareholders or less the benefit of incorporation while being taxed as a partnership. This means that any profits earned by the corporation are not taxed at the corporate level, but rather at the level of the shareholders. Also known as "S corporation".