When should an author to consider S corporation status?

March 21st, 2013 → 9:02 am @ // No Comments

I have one self-published book but I would like to publish more and within 5 years I want to incorporate a self-publishing consulting aspect of my business. In the event that I should become successful within a few years, would you suggest that I switch over to an s-corp? Is this the one that is subject to double taxation? If so, how would the double taxation apply to me as a writer and consultant?

 

Melisha,
An S corporation is not subject to double taxation. You’re thinking of C corporations that distribute dividends. The corporation is taxed and then the shareholders pay tax again on the dividends they receive.

S corporation status is a possible option for when your business grows to publish other writers and those authors bring in income. But if all the income is done by you (self-publishing your own books and consulting), then S corporation status will probably not bring any tax benefits over being a sole proprietorship.

The reason is that an S corporation owner needs to take a salary for the work they personally perform.

I cover the pros and cons of S corporation status in my book Business Tips and Taxes for Writers.

Carol Topp, CPA


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