Part 7/10:
Self-employed entrepreneurs earning $400 or more annually must file a tax return, including Schedule SE to calculate self-employment taxes. The IRS allows deductions for up to 57% of the self-employment tax paid, which can help reduce the overall tax burden.
However, simply structuring as an S corp isn't the only way to lower taxes. There are multiple strategies to mitigate the high 15.3% rate, even without incorporating, though these options might offer limited savings compared to an S corp election.
Additional Costs and State Considerations
Running an S corporation involves more ongoing expenses, such as:
Accounting and payroll services
Legal fees