Why Every Growing New Jersey Business Needs Strategic S-Corp Setup

An S-Corporation (S-Corp) is a tax designation that allows profits, and some losses, to be passed through directly to owners’ personal income tax returns without being taxed first at the corporate level.

The Core Benefits of S-Corp Status

• Eliminate Double Taxation: Unlike a traditional C-Corp, you avoid paying taxes at both the corporate and individual levels.

• Significant Self-Employment Tax Savings: S-Corp owners only pay self-employment taxes (Social Security and Medicare) on their “reasonable salary,” not on the remaining profit distributions. For a business netting $100,000, this can save thousands annually.

• Asset Protection: Just like a standard corporation or LLC formation, an S-Corp provides a legal shield that protects your personal assets (house, savings, car) from business debts and lawsuits.

• Enhanced Credibility: Operating as an “Inc.” or “Corp.” signals to vendors and clients in New Brunswick or Morristown that you are a serious, established entity.

• Loss Offsets: Shareholders may be able to use corporate losses to offset other income on their personal tax returns, which is crucial during the early growth phases.