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If you are a single member LLC, then you would continue to file your taxes in the same manner as you did when you operated as a sole proprietor. A sole proprietor and a single member LLC are basically the same type of tax entity. This means you would continue to pay federal and state income taxes, plus SS and Medciare taxes on all of your earnings.
If you choose the S Corporation status, you must pay taxes on the full amount of your earnings each year, but you can split those earnings by classifying some of them as salary and some as dividends. The IRS requires that as a shareholder of an S Corporation, you must pay yourself a reasonable salary. A reasonable salary would be the same amount of pay that someone else in your profession is being paid for the equivalent amount of hours you devote to the business. The salary that you pay yourself will be subject to federal and state income taxes as well as the social security and medicare taxes discussed earlier. But, everything you earn that is over and above your salaries, you may then withdraw those amounts as dividends, which are not subject to the social security and medicare taxes. So you automatically save 15.3% in tax on any profits that you can declare as dividends.
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Thank you Kay