Owners of all business types are likely not looking forward to the upcoming tax season. For companies hit by hard economic times, sending a big check off to the IRS can cut into operating funds. But it might be good news for S corporation owners that Congress has expanded loss carryback rules that might mean big tax savings.According to CNN Money, the loss carryback rules will especially benefit once-profitable companies that have recently suffered revenue plunges. The expanded tax law gives S corporation owners the option of carrying their 2008 and 2009 losses back five years to amend earlier taxes and earn benefits.
Businesses also have the option of carrying losses forward for up to 20 years to offset future profits when their sales pick up. This is a nice option, but CNN Money says companies that need cash right might do better to carry back losses.
Tax benefits such as this might inspire entrepreneurs considering business formation to incorporate their companies as S corporations. Still, future business owners might be well-advised to seek the services of professionals at an incorporation service to learn about the tax benefits of all business types before they incorporate.