What is an S Corporation and what are its tax advantages?

An S Corporation is a business structure available to companies in North Carolina that provides certain tax advantages not available to other forms of business structures. An S Corporation is a legal entity that has already been formed, such as a corporation or LLC, and has filed a special form with the IRS that allows them to pass through their profits and losses directly to their shareholders. This allows the S Corporation to avoid double taxation, which is when the profits of a company are taxed at the business level and then again at the individual level when they are distributed as dividends. This can be a great advantage for businesses in North Carolina, as it allows them to keep more of their profits by avoiding that double taxation. The profits of an S Corporation are taxed as personal income to the individual shareholders, so they are still subject to the individual tax rate. However, the profits are only taxed once at the individual level and not twice when both the business and the individual is taxed. Another benefit for business owners in North Carolina is that S Corporations can help reduce self-employment taxes. Self-employment taxes are taxes that are paid by the business owner on their profits. By forming an S Corporation, the profits can be passed through to the shareholders, thus reducing the amount of self-employment taxes paid by the business owner. Overall, S Corporations can offer significant tax advantages for businesses in North Carolina. By avoiding double taxation and reducing self-employment taxes, business owners can keep more of their profits and reinvest them into their business, allowing it to grow.

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What is an S Corporation and what are its tax advantages?

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