You’ve formed your LLC, you’ve signed up for a business credit card, and you’re getting ready for tax season, and maybe you’ve even found your perfect social media agency. Now over the next couple of weeks, we will talk about growing your business to include hiring assistants and Online Business Managers, forming an S-Corp and everything else you’ll need to solidify yourself as the real business you are. In this post, we’ll be talking about S-Corporations.
Again, I’m not a tax preparer or accountant and nothing I’m sharing is me advising you to do any of the above or below, I’m just a creator, like you, sharing what I’ve learned.
Am I Ready For An S-Corp?
Say you’ve launched a few courses, you’re clearing 100k a year, you’ve taken on a few employees. You might be ready for S-Corp status. Yas, bestie. Proud of you!
Typically, an LLC is taxed as a sole proprietorship, which means you pay more taxes than an S-Corp. While an LLC can have an unlimited number of members, S-Corps must restrict their number of shareholders to 100 or less, and unless you’re starting the next Fortune 500 company, you’re probably safe to assume you won’t have more than 100 employees.
Important to note: in order to form the S-Corp, you already need to have formed an LLC.
Okay…How Do I File As An S-Corp?
Before you can elect S-Corp status, you’ll need a Federal Employer ID Number (fancy), also known as a FEIN, EIN or Tax ID. Once your business has been officially formed, you can get a FEIN at no cost (phew, cause let’s be real, we’re paying enough as is) on the IRS website.
To form an S-Corp, you can use the same services you used for forming an LLC; popular ones include RocketLawyer and LegalZoom.
You Really Are That Girl
An S-Corp is big girl status! That means you’re required to pay a salary to any shareholder who performs work for your S corporation, including yourself. I know! So legit. You’re also required to pay and withhold Social Security and Medicare taxes on your employees’ wages, so if you’re ready for S-Corp filing status, you definitely need an accountant and bookkeeper to help not only make sure everything is filled correctly but also that you’re able to take advantage of the tax benefits that come with S-Corp status.
For me, I’m growing my business and taking my girlies with me. That means big changes for 2023 and I can not wait to take you along.
How serious are you about your growing business?
I hope this helped! As always, you can subscribe to my email list for more weekly social media tips. For more information on this topic, check out these blog posts: