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When you’re starting a new business, it can be confusing trying to figure out the best way to structure your business entity. The truth is that there’s no one-size-fits-all solution for every small business owner in every situation. However, if you sell musical instruments and are ready to form your company as an S Corporation, here are some things to know before filing:
Unlike C Corporations, S Corporations are not taxed for profits or losses on the federal level. However, the owners of an S Corporation are responsible for paying taxes on the income they earn from the business.
Because of this unique set up, owners of an S corporation may be able to save money by paying less in self employment taxes than they would if they operated as a sole proprietorship or partnership (in which case all profits would be included in their personal tax returns). The IRS says that “only wages and guaranteed payments paid to an employee by his/her employer should be reported as ‘wages’ on Form W-2.”
In some cases, you may also need to file paperwork with the IRS, as well. The state filing is usually free, but federal filing may cost $200-$300. The federal filing is due within 75 days of state filing.
After that date, if you want to change to an S Corporation you will have to wait until the next tax year and pay late fees. So, if this is your situation make sure that you file by March 15th!
You can also file for a new business type at any time, but March 15th is the last day to file for an S Corporation. If it’s past this date and you haven’t filed yet then don’t worry: there are still ways to get your taxes done on time!
Form 2553 is a federal election form that must be filed by March 15th each year with the IRS. The cost of filing this form is $50 or $100 depending on whether you want a copy of your return included with the submission, so please factor this into your overall costs as well!
We’ll help you with all the paperwork and file it with the state and federal government for you. We’ll also help guide you through each step of the process so that everything goes smoothly. You can get started with our online incorporation service here!
Why should you form an S corporation? Because it’s the right thing to do. S corporation status is a great option for musicians, and it’s a good choice for anyone who wants to keep their tax bill as low as possible.
S corporations are recognized by the IRS as separate entities from their owners, so they can keep their profits within the company without paying taxes on them. This means that your share of profit will be taxed at an individual rate when you receive it. And if you plan on staying small and growing organically, this can save you some money down the line!
The government has also made it easier for small businesses like yours to take advantage of these savings in recent years: there have been several changes since 2016 that make forming an S corporation even more attractive than ever before! By registering with us today, we’ll help guide you through this process step-by-step so that everything goes smoothly when filing your taxes next year.
Congratulations! You’ve just formed an S-corporation for your music instrument business. Now, it’s time to get to work making music and earning money. And don’t forget – if you’re ready to form your business as an S-Corporation, take a look at our online incorporation service here!
Register Your Trademark & Get The Delivery of your USPTO Serial No. In 24 Hours
Register Your Trademark with USPTO Today & Get Serial No. in 24 Hours