How to know if you should elect S-Corporation status as a freelancer to save money on taxes

How to know if you should elect S-Corporation status as a freelancer to save money on taxes

Quick summary:

1. Normally, as a business owner, your entire income is subject to self-employment taxes, which is the equivalent of FICA taxes for employees, plus income taxes.

2. Riley Adams, a CPA and the founder of Young and the Invested, told Insider he recently incorporated his freelance writing business and elected S Corporation status.

3. So you might be saving money on self-employment taxes, but you might be paying more in income taxes, Derus said.

4. It only makes sense to file as an S Corporation if your work is consistentFor freelancers earning consistent and growing income, an S Corporation may be a great idea.

5. With an S Corporation, your entire income is still subject to income taxes

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