If you’re a Montana entrepreneur or business owner operating a profitable small business, you probably ought to consider forming either a limited liability company or a corporation and then electing to use the Subchapter S tax accounting rules.
Here is why: with other entity types, you’re not only paying federal and state income taxes on all your business profits, but you are paying self-employment taxes on those very same profits too. These aren’t just a couple percentage points either. We are talking about 15% on the first $120,000 of profit. If you’re lucky to earn more than that, you’re looking at saving five figures annually.
Making the s-election on an eligible entity allows you sidestep some of (well, actually, a lot of) the self-employment taxes you pay.
Our Montana S Corporation kit
Now that you know the tax reasons why you should consider this, let’s look at the next option. Which entity type is right for me to use as a base? You mentioned LLCs and corporations? I thought it was an s-corporation?
If you are asking these types of questions, we would urge you to go with the limited liability company option. This is because there are generally fewer filing and annual requirements while still maintaining separation of personal and business assets.
Click below to purchase our recommended LLC option:
Or, get the alternative corporation option is available here:
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If you purchase one of our kits, read through it, and decide “Yikes! This is more difficult than I though!” Send a refund request to steve.nelson@stephenlnelson.com and we will issue a refund.
Additional Resources
How S Corps Are Taxed: Become familiar with how your profits will be taxed while operating as an s-corporation.
DPAD: A Big Deduction for Some Small Businesses: If you produce, manufacture, or grow something, you may be eligible for even more savings.
Accounting System Recommendations for Novice Bookkeepers: Not the best at keeping the books or filing all the necessary payroll forms? Check out a few options.