S Corporation

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doclotek
Posts: 10
Joined: Thu May 19, 2011 7:15 pm

S Corporation

Post by doclotek »

I was thinking of starting a side company/ S Corporation since I am currently a consultant. I am worried about initial losses that the S Corporation might incur.
Since I expect to be on a W-2 in the near future I am wondering if the loses that I incur with the S Corp can be used to offset/ deduced from my W-2 salary?

thanks
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Bulldawg
Posts: 536
Joined: Mon Jan 05, 2009 7:30 am
Location: Hotlanta

Re: S Corporation

Post by Bulldawg »

yes, the net income or loss from the sub S " passes thru " to your personal 1040; a loss would be listed on your schedule E and would offset W-2 income...
" IN GOD WE TRUST " ( official motto of the United States )
pobox2001
Posts: 79
Joined: Sun Apr 17, 2011 4:27 pm

Re: S Corporation

Post by pobox2001 »

The income on the W-2 could be offset by the S-Corp losses on the K-1 for income tax purposes. However, you'd still pay SS and Medicare on the W-2 wages.

IMO you'd be better off with an LLC while there are losses in the company, then convert to an S-Corp when it turns profitable. The S-Corps can save you in SS and Medicare on the K-1 profits.
Topic Author
doclotek
Posts: 10
Joined: Thu May 19, 2011 7:15 pm

Re: S Corporation

Post by doclotek »

IMO you'd be better off with an LLC while there are losses in the company, then convert to an S-Corp when it turns profitable. The S-Corps can save you in SS and Medicare on the K-1 profits.

If I am the only employee and owner does an a LLC still make sense?
deathb4disco
Posts: 117
Joined: Fri Feb 06, 2009 12:56 pm
Location: Atlanta

Re: S Corporation

Post by deathb4disco »

doclotek wrote:if I am the only employee and owner does an a LLC still make sense?
That's called a "single member LLC", and you don't have to file a separate return for them. Just report the income on Sch C of your 1040.
jared
Posts: 554
Joined: Sun Jul 06, 2008 11:57 pm

Re: S Corporation

Post by jared »

Bulldawg wrote:yes, the net income or loss from the sub S " passes thru " to your personal 1040; a loss would be listed on your schedule E and would offset W-2 income...
Yes, but keep in mind, losses can only be taken if the shareholder has sufficient basis in the corp.
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