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Old 02-03-2011, 03:40 PM   #8 (permalink)
YPBSalon
 
Join Date: Feb 3 2011
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Re: S Corp or LLC Which is best for tanning salons?

Quote:
Originally Posted by excitednewguy View Post
No, you are wrong. A K1 is only for partnerships and is needed when filing where partners are involved.

A K-1 is used by a Partnership or S-Corporation to report a partner/shareholder's distributed share of income.
Partnerships and S-Corporations do not pay income tax. Instead, they file their corporate / partnership tax return as an informational return only. This return will distribute the net profit to the shareholders or partners based upon their percentage of stock or how the partnership agreement reads.
For example, if you own 50% of ABC Corporation, an S-Corporation, and ABC Corporation shows a $100,000 profit in 2007, you will receive a K-1 for 50% of the net profit, so $50,000. You would have to claim this $50,000 of income on your personal tax return. Because the company does not pay income tax, the net profit is passed through to the owners who pay the income tax on their personal tax returns.




An S-Corp sole member or LLC sole member is taxed exactly the same, it is a pass through recorded on the Schedule C
Actually, you are wrong and Robert K is exactly corret. Having just had my taxes done by a certifed account, I know for a fact that as an S-corp and being a single owner, you use a K-1 and it carries over to your personal return. A schedule C is not filed.
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