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What Is a Pass-Through Entity?

New businesses are formed as pass-through entities to benefit from favorable tax treatment, and some forms of pass-through entities also offer enhanced protections in the form of limited liability for their owners. These business forms are incredibly beneficial to owners and properly used, saving them tremendously on taxes. Types of Pass-Through Entities Pass-through entities generally …

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S Corp president and a share holder walking and talking in the office discussing the 50/50 rule for salaries

S Corp Salary 50/50 Rule: A Complete Guide

Many S corp owners working in their business question how much they should pay themselves as an employee of the company before taking their distributions. Unfortunately, many business owners and accountants are misinformed about calculating reasonable compensation, preferring to adopt old myths that potentially hurt the business owner financially. This article will discuss the 50/50 …

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How Compensatory Intent Affects Compensation Deductions

For a corporation to deduct a payment made to a shareholder/employee as compensation, compensatory intent must exist.  Originally published in TheTaxAdviser.com on December 7, 2023. Copyright: AICPA.  It is well known that the tax laws create limits on the amounts that corporations can treat as compensation paid to their shareholder/employees. When an S corporation, C corporation, …

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Paying for Personal Guaranties of Company Debts

Originally published in The Tax Adviser, September 2022. Copyright: AICPA It is common for business owners to personally guarantee company debts. This is a valuable service since many private companies could not otherwise obtain financing in the current lending market. Indeed, business owners already face considerable risks and may not want to assume more. When …

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The Role of RCReports in Tax Planning: Tools and Strategies for Success

Tax planning is an essential aspect of financial management for businesses and individuals. Properly managing your tax obligations can lead to significant savings and financial security. However, with a complex and ever-changing tax landscape, it can be challenging to navigate these waters effectively. This is where tools like RCReports come into play, providing valuable assistance …

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Mastering the Art of Reasonable Compensation Analysis for Business Tax Planning

When it comes to navigating the complex world of business tax planning, one critical element often overlooked or misunderstood is “reasonable compensation analysis.” This process is an essential tool for tax professionals seeking to optimize tax strategies for their clients while remaining compliant with the IRS.  In this comprehensive guide, we will delve into the …

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Choosing the Right Entity: A Comprehensive Guide to Entity Selection in Tax Planning

Selecting the right business entity is a critical decision for entrepreneurs and business owners. This choice can significantly impact their tax liability, legal obligations, and overall financial success; therefore, this can be a lucrative advisory service for tax professionals to offer. In this comprehensive guide, we will explore the various business entities and their tax …

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