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Thanks so much for the reply! I will relay this info to them. When they first started the company, they consulted with a corp tax accountant, who recommended the s-corp. At the time, it was just a small business. They expected a small loss the first year, during setup, and getting all the necessary stuff going. After that, they expected small income. The small loss has happened this year, but things are looking up for next year.

Well, IMNSHO, you've put the cart well out in front of the horse. I consider consulting with an accountant as almost a mandatory step before deciding on the form your business should take. For example, why did they pick an S corp over a partnership or an LLC? Are they aware of the differences in taxation between these three entities?

I wholeheartedly agree. I think you are right they put the cart before the horse...the question now is, how to push a cart! As I noted, they did consult with an accountant on the setup of the corp, and it was recommended to do an S-corp. They also were looking at an LLC, but for tax reasons, the acct (one who does exclusively corp taxes) recommended the S-corp. Beyond that though, I am wondering if the accountant recommended the S-corp, because they would have to hire someone to do the taxes? Do the software packages work for taxes? Thanks for the info to soak on and think about. I'm trying to help out, although taxes are not my strong point, which is why I read this board on the fool everyday...someday I hope to know more!!!
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