To know if the S corporation is the best choice of entity for your business, first you need to consider three advantages and nine disadvantages. Next, you need to take the S corporation advantages and disadvantages that apply to you and get a bottom-line number comparison with your second choice for an operating entity. In this way, you can make a logical choice, knowing that your best choice will stay with you for a number of years and let you pocket more after-tax cash while you sleep better at night.

Do you operate your business as a corporation, an LLC, or a proprietorship? Your choice of entity impacts a variety of tax deductions, and now the cell phone creates a win for the corporate owner and a loss for the proprietorship and the single-member LLC.

The IRS admits that its regulation that made the single-member LLC a corporation for payroll tax purposes is unfair to small business family employment. To right this wrong, the IRS allows the single-member LLC to use the family employment rules to exempt FICA and Medicare taxes retroactively to January 1, 2009. The regulation granting this change expires on or before October 31, 2014.

Is your worker an independent contractor or an employee? You want to get this right at the beginning. But if you improperly classified an employee as an independent contractor, the IRS has a tax penalty relief program for you. Should the IRS plan not have the best relief for you, consider the Section 530 employer protection plan.

In the right circumstances, the single-member limited liability company (LLC) gives you corporate liability protection combined with easy Schedule C (proprietorship) rules for your tax return. In this article, you learn the two tax advantages and two tax disadvantages to the single-member LLC.

Tax law makes it hard for the owner of an S corporation to win deductions for his health insurance. First, the corporate-provided health insurance is not a tax-free fringe benefit for the owner. Second, the S corporation has to pay for the health insurance or the owner will suffer a loss of tax deductions. Third, the S corporation payment for the health insurance will produce wages either exempt or nonexempt from FICA and Medicare taxes. This article shows you how to make the three tax deduction rules work for you.

The appeals court remanded the Shellito case back to the Tax Court along with its road map for establishing the Section 105 plan. In the right circumstances, the 105 medical plan creates tax deductions where none existed before, and its tax-free fringe benefits can operate as the sole remuneration to the employee-spouse.

If you want to operate your business as an S corporation, you need to recognize that the S corporation is a separate legal entity and that you are an employee agent of that corporation. You also need to ensure that the S corporation is the earner of the income. You may not assign your income to your corporation.

Your business ownership creates an opportunity for a tax plan that can give you tax deductions for hiring your children and can give your children tax-free income. But your tax plan does not stop there. Your children might start Roth IRAs where they can invest their tax-free income in a college fund. Done right, as described in this article, the government pays you for your help with this plan.

Does your chart of accounts contain two categories for your business entertainment tax deductions? It should. Your tax deduction for an employee party goes into a different deduction category from your regular business entertainment. Learn about the two accounts and how to get more tax deductions when you party with your employees.

The courts have determined that the alternative minimum tax (AMT) cheats many commissioned W-2 employees out of their rightful deductions. To fix this problem, the courts have allowed certain commissioned W-2 employees to move their employee business expenses from the IRS Form 2106 itemized deduction category to the tax-advantaged sole proprietorship on Schedule C.

Learn how to avoid payroll tax problems when you hire a nanny or other household worker. Your best bet is likely a payroll service that specializes in “nanny tax” compliance.

The defined benefit retirement plan might be your choice of retirement plans if you are age 50 or older and your business earns a healthy income.

You are not self-employed for tax purposes just because your employer says so. This is true even when your employer is the British consulate general.

The single-member LLC is a disregarded entity for federal income tax purposes, but a corporation for employment tax purposes.

This is the second article in our series on the best small-business retirement plans. Here we identify the four major advantages and three disadvantages to the SEP.

You need preventative steps to ensure that you are paying the wages you think you are paying to your employees and that your payroll tax deposits are actually being sent to the IRS and not to an embezzler’s pockets.

Tax law creates trouble for selected fringe benefits that the S corporation gives to a more than 2 percent shareholder. The loss of benefits and accompanying complications are factors to consider in the selection of the S corporation as your choice of business entity.

Do you provide supper or other meal money when you require your employees to work overtime? If so, is the meal money a tax-free fringe benefit or is it additional W-2 compensation to the employees?

Under the right circumstances, you can provide tax-free lunches to your employees. That’s nice. But what about you? How do you, the business owner, qualify for this tax-free fringe benefit?

Tax credits are a true incentive for the business owner. They reduce taxes dollar for dollar. Now, you have waiting for you a hefty 35 percent tax credit on small-business health insurance coverage for employees. Here are the rules you need to know.

Do you own a business that withholds taxes from employees? If so, you need 100 percent certainty that the withheld payroll tax monies are going to the IRS. You can achieve 100 percent certainty with the IRS EFTPS registration..

You can use the transportation fringe benefit in lieu of wages. In fact, you can ask the employee to take a pay cut equal to the transportation fringe benefit. Amazingly, this swap of a pay cut for the transportation fringe benefit works out to give the employee an after-tax cash raise in pay and it puts cash in your pocket too.

You can use a Section 127 education plan to obtain tax benefits for yourself (or your corporation) while you help your grandchild through college or other learning.

As a subscriber, you may download this sample Section 127 educational assistance plan in Microsoft Word. Then, simply modify the document to your business use.

With net business income less than $115,647, the sole proprietor with two qualifying children and a stay-at-home spouse can hire the spouse and pay a wage of $6,000 to create a $1,200 child care credit with no change in their joint income taxes—other than realization of the $1,200 credit.

Answering “yes” to the 11 puts you on the road to audit-proof status for your Section 105 medical reimbursement plan.

This proprietor paid his employee-wife $12,000 in wages. Now, she wants to contribute the entire $12,000 as an elective deferral to her 401(k) account but she no longer has $12,000 because of payroll taxes. With some mechanical adjustments, the employee-wife may contribute the full $12,000.

The IRS is not a forgiving entity. Even if a fraudulent payroll service is charged criminally, as in this case, you are still responsible for the taxes you owe. We give you a sound strategy to avoid payroll fraud.

Business owners, do not be tempted to “borrow” payroll taxes to contribute to the company. This is not only illegal (with penalties), but might leave you personally liable for the stolen money.

If you hire your spouse, you can save a lot of money in taxes by not paying him/her a wage. Instead, cover him/her and your family with medical benefits under Section 105.

When you receive a 1099 or a W-2, you should file a tax return even if no return is required.

The kiddie tax applies to unearned income. It does not apply to earned income.

Vigilance pays off. This payroll service did not know this rule: wages paid by a parent to his under-age-18 child are exempt from payroll taxes.

The expansion of the kiddie tax to children under the age of 18 has zero negative effect on the hire-your-child strategy.

The W-2 reporting requirements exempt the Section 105 medical plan reimbursements from entries on the W-2.