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Let’s talk about small business health insurance options. I’m only covering a small snippet of small business health insurance options here. You really do need to talk to a health insurance agent about the specific options that exist for you, both in your state and based on the unique factors of your company and your team.
Group Insurance for Small Business
You're not required to have a group insurance plan for your business until you have 50 team members or more. But if you’re in an industry like mine where the talent is really competitive, you may need to consider having some sort of a health insurance benefit before you get to 50 employees, mostly to have some sort of attraction level for A players.
Personal Health Insurance for a Business Owner
When it comes to your personal insurance, if you don't have a group plan, you can go out and get a private plan by talking to any health insurance agent. Based on your income, you may or may not qualify for health subsidies. So again, it's really important that you talk to a qualified health insurance agent so they can walk you through all those details.
How to Write-Off Your Health Insurance Premiums
These instructions are specifically for an S-Corp.
We see this done incorrectly all the time. The two biggest mistakes we see are either not paying for it out of the business, or not picking it up on their W2. Pay for your health insurance out of your business as an S Corporation. Pay the premium out of your business and book it as a health insurance expense. As the owner of the S Corp, assuming you own more than 2%, which in our case almost all of our clients do, you have to pick up your health insurance amount on your W2 as Additional Income. Then when you file your personal tax return, there is a spot on your personal tax return called Adjustments to Income and you put your health insurance amount there so that it is reducing your taxable income.
Consult with Qualified Professionals
There are many small business health insurance options for both your business and you personally as the owner, even if you don’t have group insurance. But again, get a good health insurance agent on your side and a qualified accounting professional to help you write-off your health insurance the right way. It's very easy to do for an accountant. But like I just explained, there are multiple steps to make sure it happens the right way. By using a professional, you get the max benefit without getting in trouble by doing it the wrong way.
Talk with a Tax Genius here at Incite Tax to make sure you’re compliant with how you’re deducting your health insurance premium from your taxes.
John Briggs | Tax Genius
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