For example, a corporation can deduct all its business expenses, including operating costs, advertising, employee medical, and retirement plans.
The 2022 US corporate tax is 21% of profits. And if you think about it, this is lower than some of the individual tax rates. It’s also important to note that you only pay tax on the income your company retains at the end of the year — owners of a corporation can save on taxes by investing some profits back into the business.
As an LLC, or if your CORP has fewer than 100 shareholders (which whatsapp data means you can’t go public), the IRS gives you the option to file an ‘S-Corporation election’. This tax designation gives you ‘pass-through or flow-through’ taxation, where you pay taxes on all business profits through your personal tax return forms.
For LLCs, an S-Corp tax designation works well for added oversight if there are multiple people running the company, because you’ll need a Board of Directors.Plus the members can choose to be classed as employees to receive cash dividends from company profits.