S Corps for Law Firms – S Corp CostsJul 28, 2018
Choosing to be taxed as an S Corp does trigger several additional costs.
S Corp owners are required to receive wages through payroll checks. If the law firm does not have a payroll services in place, a payroll service must be started.
Once the firm owner is on payroll, their wages are subject to state and federal unemployment taxes. Arizona unemployment rates start at 2% of the first $7,000 of wages for an annual total of $140. Federal unemployment taxes are .6% of the first $7,000 of wages for an annual cost of $42.
Workers Compensation Insurance
Most states allow business owners to opt out of the worker’s compensation insurance that is normally required for all employees.
Income Tax Preparation Costs
Filing an S Corp Tax return is more complex than filing a schedule C.
All additional costs are tax deducible.
All of the above costs are tax deductible. If the owner’s federal and state tax rate is 35%, a marginal $100 of costs reduces the owner’s take home cash by only $65.
Stay connected with news and updates!
Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.
We hate SPAM. We will never sell your information, for any reason.