Are S Corporations obsolete?
Yes…99.999% of the time. It is a little known fact that LLC’s are the most flexible limited liability entities in the U.S. They can can be structured to be taxed as a C corporation, S corporation, partnership, or sole proprietorship (an entity that is disregarded from its owner for tax purposes.) PF Shield frequently encounters attorneys and CPA’s who prefer S corporations over LLC’s for many small business owners. They believe an S corporation provides superior tax savings. They argue that an LLC member must pay self-employment tax on their share of company profits (which is 15.3% of the first $89,900 of income), whereas the stock dividends received by S corporation shareholders are not subject to such a tax. Therefore, they believe by making the small business owner an employee of the S corporation, with a salary that tends to be on the very low end of “reasonable”, all other compensation is received free of such taxes. Although it is correct that tax savings can be gained in this
