As you decide on your business structure, you’re probably considering each type’s legal and financial protections. It’s unlikely you’re thinking about the tax implications of your healthcare costs. That’s where the S corporation business tax structure can surprise many business owners.
Business owners start corporations to insulate themselves from their company’s debts. Some corporations can elect S corporation taxation to avoid the double taxation that comes with traditional C corporations.
S corporations further advantage owners involved in management because they can pay themselves in dividends after a reasonable salary. Dividends are subject to federal and state income tax but not payroll taxes.
But the S corporation waters muddy when it comes to providing owners with health insurance benefits. Follow our guide to achieve the maximum tax advantage for S corporation owners’ health insurance.