@antiochus Which is not an investment vehicle, merely forced savings. No reason to pay additional taxes for the chance of that happening.
When does it make financial sense for you to file taxes as an S corporation? Here's the math. (super long post)
- Thread starter sherwood
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@nihal Well, to each his/her own. I'm getting up toward retirement age. Will probably start taking Social Security in 8 years, and I wish I had taken more in the form of salary, since that would get me to the place where all expenses would be covered by my SSN payments (and my investments would all be gravy).
@antiochus In Canada, you only pay into pension up to I think $55k roughly, so they aren't calculating your pension on any salary over that amount. It's good to consider that, but shouldn't make a difference if you are paying yourself a "reasonable" salary.
@sherwood Well written. Very conservative. I tell clients about 40-50k of profit to go S corp.
One thing no on ever mentions is audit risk/probability. You have a startup company with 100k of income and 90k of expenses. SMLLC or just sole prop on a schedule C will have that return audited at a very high %.
S Corp. almost never.
One thing no on ever mentions is audit risk/probability. You have a startup company with 100k of income and 90k of expenses. SMLLC or just sole prop on a schedule C will have that return audited at a very high %.
S Corp. almost never.
@acc000 One reason is due to your personal tax return going to one branch of the IRS that reviews only personal returns.
Partnership, S-Corp and C Corp returns go to another branch that only reviews business returns.
I personally would want someone that generally understands how businesses operates to review my business returns as opposed to someone that knows very little about it and questioning every expense listed on my schedule C.
Partnership, S-Corp and C Corp returns go to another branch that only reviews business returns.
I personally would want someone that generally understands how businesses operates to review my business returns as opposed to someone that knows very little about it and questioning every expense listed on my schedule C.
xmudpuddle
New member
@xmudpuddle You're very welcome 
jilljilljill
New member
@sherwood In my opinion, the main reason for using a corporate structure is not to save on taxes, but to limit liability.
People file lawsuits all the time. If a someone my business and it's a sole proprietorship/partnership, my personal assets are at risk. But if they sue my business and it's a corporation of any type, only the business assets are at risk - they can't touch my house or personal savings.
And if you're going to be a corporation to limit your liability, it only makes sense to be a tax-advantaged one (sub-S or LLC) instead of a C-corp, which results in double taxation (corporate tax + personal income tax on dividends paid out).
Also, using a payroll service is not a requirement. You can handle your own payroll and related tax filings (my business does). Payroll services will pitch their use as having the advantage of limiting your liability - they'll cover any fines for filing errors, which do happen from time to time. But if you're careful, you won't be fined very often or very much... over the course of my career I've paid about $200 or so in payroll associated penalties, but doing payroll myself has saved well over 100x that on what I would have spent on an outside service.
People file lawsuits all the time. If a someone my business and it's a sole proprietorship/partnership, my personal assets are at risk. But if they sue my business and it's a corporation of any type, only the business assets are at risk - they can't touch my house or personal savings.
And if you're going to be a corporation to limit your liability, it only makes sense to be a tax-advantaged one (sub-S or LLC) instead of a C-corp, which results in double taxation (corporate tax + personal income tax on dividends paid out).
Also, using a payroll service is not a requirement. You can handle your own payroll and related tax filings (my business does). Payroll services will pitch their use as having the advantage of limiting your liability - they'll cover any fines for filing errors, which do happen from time to time. But if you're careful, you won't be fined very often or very much... over the course of my career I've paid about $200 or so in payroll associated penalties, but doing payroll myself has saved well over 100x that on what I would have spent on an outside service.
@jilljilljill Sure, I just use a payroll service because it's lower-hassle for me.
aaronthestudent
New member
@aaronthestudent Wave. About $45 a month.
@jilljilljill Depends on the filing service. Recently had QBO completely shit the bed on reminding me to file payroll taxes. It did it again this month too. They did NOT reimburse me the fines.
alannasteph
New member
@jilljilljill I've read in several articles that single member LLC is still personally liable so I'm not sure about the limited liability thing.