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To minimize your tax, you would be better suited to file as an S Corp.
Under an S Corp you pay yourself a "reasonable" salary, and that's the only amount of income that you have to pay employment taxes on.
With a sole proprietorship you have to pay these taxes on 100% of your profits
You can have S Corp treatment one of two ways: One, you start a corporation and elect S Status, or two you open an LLC and elect to be taxed as an S Corp.
Either way you get the same treatment.
Now, the very important thing to remember about S Corps is that you will have to file a return annually, even if you have no income or expenses
If you dont there are steep penalties.
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yes i did i am reviewing now. is the LLC as an Scorp the easiest and fastest way? I have to sign the contract next week so i want something quick and easy. Also, as an Scorp should I be the only worker/owner or should, i have my wife, child etc. as the partners or should i get a outside partner? thank you
The LLC has the greatest ease of formation, and it's easier to stay in compliance with laws. You don't need a partner - you can be the only owner/shareholder
ok so i will start LLC as Scorp.. would i get a SCorp TIN or LLC TaxID? Should I get that via the state of FL or Nevada?
You apply for an EIN as an LLC. I would also open in Florida, as that's your state of residence
ok great! last questions :) the recommendation is 60% salary and 40% dividend on the Scorp- correct?? I would also need to get business license?
That's correct. You've done your research. Both are correct.
wonderful thank you megan. unless there is anything else you think i should know you have answered my questions wonderfully ;)
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will do take care
Have a great day
i forgot the most important question!! the main contact this year (the 200K job) is w2 (because I di dnot have a comp set up when I started).. so should I just do sole prop until next year?