Quote: (09-02-2011 05:23 PM)worldwidetraveler Wrote:
I guess firstly, what is significant income? C Corps are not too expensive to maintain. Maybe you are talking about California fees which isn't the same as the rest of the US.
I don't know where you got that. You have more stuff to comply with an you should be doing similar stuff with your llc to make it look legit.
CA basic fees are the same for C/S corp and LLC. It was around $800 a year last time I checked. However AFAIK if you're corp, there are extra requirements, i.e. board meetings, protocols, more paperwork with your tax return etc. This article highlights some issues; it compares against sole proprietorships, but most single-person LLCs are the same.
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Second, distributions from a SCorp or LLC are not taxed the same as income. Social Security and Medicare are only paid on SALARIES. Thus, you are not paying those if you don't take a salary.
Yes. However there is a fine line. If your corp makes around the amount of salary you're paying yourself, there are no savings. If your corp makes much more over 100k, then savings are low because social security taxes stop around 100k, and the rest is Medicate only at 2.9% (plus income, of course).
Ultimately it all depends on how much money your business makes versus your expenses. There is no single perfect structure.