employee of own company??

S. Corp requires that you pay yourself a reasonable wage as an employee (subject to same tax withholdings as other employees), but then on the profit that you keep above that you don't have to pay any ss, medicaid/care taxes. Saves me thousands in taxes. I still elect to be excluded from work comp insurance.
 
Doesn't the company still have to pay the matching SS on the payroll plus unemployment
 
Mark 8262 said:
Doesn't the company still have to pay the matching SS on the payroll plus unemployment
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Yes it does, but if you aren't an s-corp you are paying both halves of it anyway. The state unemployment insurance is an additional tax on part of your income (the reasonable wage) that you don't have if you aren't taxed as an s-corp. For me the savings was in the thousands and the costs in the hundreds.
 
Is there a gross income minimum to move to an S-Corp or LLC ? I was told my a source that I don't think is reliable that you have to be grossing almost a million per year to move to S-Corp or LLC.
 
Pay the money, and talk to an accountant. One that is actually practicing and deal with this stuff. Sometimes you have to pay the pros to be the pros.
 
Scott Stone said:
Pay the money, and talk to an accountant. One that is actually practicing and deal with this stuff. Sometimes you have to pay the pros to be the pros.
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Lawyer and accountant. Realize that I will have to deal with both of them at some point in the next 6 weeks.

I have done the best I could searching on the internet which by the way was a waste of my time lol
 
Christopher said:
Is there a gross income minimum to move to an S-Corp or LLC ? I was told my a source that I don't think is reliable that you have to be grossing almost a million per year to move to S-Corp or LLC.
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I am an LLC and I am not making a million yet. Going to S Corp next year.
 
You can also take a draw and pay your quarterly income tax on your states irs website. I am llc and I cut myself a paycheck. It all works out the same and it's much easier. My accountant said it's not really ideal but it works out in the end to be the same as a draw.
 
Yep taxes sucked this year. It was nice getting a return for a few years. The new hvac system will have to wait a couple months. Always paid myself a salary when remodeling and the accountant did his magic with the earned income tax credit. There was a lot of cash to make things work thou. Soon as I started in state work the numbers just wouldn't work in my favor. Taking a paycheck will save your ass if you get lazy a couple of quarters. Call it safety money in the bank
 
Both LLC and S-Corp are pass-thru taxation. S-Corp requires an application with the IRS and I had $0 revenue when I formed my holding company as a Sub Chapter Corp... You will need corporate by-laws, annual reports issued to your state, etc though. Which sounds alot more complicated than it is. Really its quite simple.

My preference is S-corps because you can avoid self employment tax if you're racking in some cash after you pay yourself a "reasonable salary" which the IRS does not define. we see salary as 50-80% of profit, and the balance "dividend" is not subject to self employment tax.

A great resource for general small business info is SBA.gov. An attorney will cover any start up info and get your liability buttoned up.
 
If you ever sell your company you will be taxed earned income for the profits on an LLC. If you sell a S-Corp it's capital gains.
 
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