Are professional corporations subject to double taxation?

A professional corporation, in contrast, is not a pass-through business and is therefore subject to double taxation. The concept of pass-through taxation is that shareholders, for tax purposes, are one with the company. As a result, shareholders must absorb both profits and losses from an S corporation.

How is a professional Corp taxed?

Unlike sole proprietorships, partnerships, and LLCs, professional corporations do not enjoy pass-through taxation, which means the professional corporation pays tax on its profits, and the owners pay tax a second time on the same income on their personal tax returns.

What is a Schedule 50 form?

Schedule 50, Shareholder Information Complete Schedule 50 if you are a private corporation and if any shareholder holds 10% or more of your common and/or preferred shares.

What type of tax return does a professional corporation file?

After successful S corporation election, the corporation will still be required to file Form 1120S every year to report profits and losses, even though these are not taxed at the corporate level. Profits and losses are allocated to shareholders by filing a Schedule K-1.

What are GIFI codes?

The General Index of Financial Information (GIFI) is a standard list of codes that you use to prepare your financial statements. All corporations (except for insurance corporations) should prepare their financial statement information using the GIFI codes and file it with their T2 returns.

What is a T2?

What is a T2 Form? A T2 form is a taxpayer form for all Canadian corporations to file their income tax. Corporations must submit their T2 forms within six months of the end of a fiscal year or calendar year.

Who was the only accountant working for the S corporation?

Spicer Accounting v. United States, 918 F.2d 90 (1990) Spicer was the only accountant working for the firm and it was owned 50-50 with his wife. He only received dividends, and claimed to donate his services to the S corporation.

What is the corporate tax rate for 2010?

With effect from Year of Assessment 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company. The table below summarises the CIT rebate percentage and cap given for companies*.

How much should an S Corp pay an officer?

In other words, if your S corporation earned $150,000 before shareholder salaries, and you wanted to maximize your 401k contribution, you might pay $150,000 as reasonable officer compensation which would be 100% of your business income.

What are the taxes on a 10, 000 shareholder salary?

This is broken down into 6.2% Social Security and 1.45% Medicare. Your company must also pay 7.65% for a combined percentage of 15.3%. Adding on 24% in income taxes equates to a 40% tax rate… yuck! Therefore, a $10,000 shareholder salary costs you $1,530 in additional taxes beyond income taxes.