Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
Thank you for your question. You should consider an S-Corporation for your new business. It's a pass through entity, meaning you will be taxed at your individual
level although you will have some benefits
over being self-employed as a Schedule C
The biggest thing is that you will pay yourself a 'reasonable salary' in which case you will owe FICA taxes on. In the case of a Schedule C, you would pay self employment taxes (which are FICA taxes) on 100% of profit.
With the S-Corp you will file an 1120-S informational return
, and that will generate a Schedule K for your personal tax
return. You will also file 940 and 941 returns annually and quarterly
for your payroll to yourself.
from the S-Corp would then be taxed as a dividend
, which is still at your ordinary income tax rate
but no self employment taxes would apply. ** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid, but the Web site will still collect your payment. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**