Freelance Glossary > S > S-Corp

S-Corp

An S-Corporation (S-Corp) is a type of corporation that is taxed differently from a regular C-Corporation. Specifically, an S-Corp is not taxed at the corporate level, and instead, its income, deductions, and credits flow through to the shareholders’ personal tax returns. This means that the company’s profits are taxed only once, at the individual shareholder level.

S-Corps can be a good option for freelancers who are looking to establish a more formal legal structure for their business and potentially save money on taxes. By incorporating as an S-Corp, freelancers may be able to take advantage of certain tax benefits, such as lower self-employment taxes and the ability to deduct certain expenses as business expenses.

However, there are some potential drawbacks to consider as well. For example, setting up and maintaining an S-Corp can be more complicated and costly than other legal structures, such as a sole proprietorship or LLC. Additionally, S-Corps have more stringent requirements for record-keeping and corporate governance, and shareholders may be subject to certain restrictions on their ownership and transfer of shares.

Articles that talk about "S-Corp"

Found Bank Review: What I Learned from Trying ‘Found’ Free Banking for Freelancers

Found Bank Review: What I Learned from Trying ‘Found’ Free Banking for Freelancers

Banking is a core part of every freelance business. While looking for some banking alternatives, I came across Found, and after trying it for myself,...

9 Best Bank Accounts for Self-Employed & Freelancers [Updated 2023]

9 Best Bank Accounts for Self-Employed & Freelancers [Updated 2023]

Setting up a self-employed bank account or a bank account as a freelancer is critical when it comes to managing your business. Since you are...

Sole Proprietorship Pros and Cons You’ll Want to Consider

Sole Proprietorship Pros and Cons You’ll Want to Consider

As a hardworking freelancer, you may find the legal side of operating your business somewhat puzzling at times. There are plenty of freelancers who find themselves...

How To Legally Start A Freelance Business In 9 Steps

How To Legally Start A Freelance Business In 9 Steps

Being a freelancer can be a liberating experience. It gives you the potential to work anywhere in the world, from your couch or a park...

More articles about "S-Corp"