The video discusses a common mistake made when electing S-corp status for a business. The primary error highlighted is choosing S-corp status in situations where it does not result in significant tax savings. The speaker emphasizes that this can be detrimental, especially if the business owner later qualifies for Qualified Small Business Stock (QSBS) exclusion, which can exempt millions of dollars from income upon selling the business. The mistake occurs when an S-corp election is made to save a relatively small amount annually (e.g., $10,000), which is considered poor long-term planning when viewed holistically and in light of tax law. The speaker, identified as a tax attorney, advises viewers to subscribe for more insights.

Jasmine DiLucci, JD, CPA, EA

The biggest escort mistake that I see online is definitely electing it in situations where you don't save tax, right? Because you don't want to create an escorp and then realize that actually when you sell your business you could have done qualified small business stock and excluded millions of dollars from income.

But because you did an escorp to save you know 10,000 bucks a year that would be bad planning when you look at it holistically and for actual tax law from a tax attorney. Subscribe.

Biggest S-Corp Mistake

The biggest escort mistake that I see
online is definitely electing it in
situations where you don't save tax,
right? Because you don't want to create
an escorp and then realize that actually
when you sell your business you could
have done qualified small business stock
and excluded millions of dollars from
income but because you did an escorp to
save you know 10,000 bucks a year that
would be bad planning when you look at
it holistically and for actual tax law
from a tax attorney subscribe.

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Biggest S-Corp Mistake

Transcription