Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

If I decided to be incorporated, how will that affect my

Customer Question
taxes?...
If I decided to be incorporated, how will that affect my taxes?
Submitted: 10 months ago.Category: Tax
Ask Your Own Tax Question
Answered in 1 hour by:
1/2/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 10 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,884
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi.

...

That depends on the type of corporation.

...

A Sub - S (referred to many times as an S-Corp) is a pass-through. Doesn't pay taxes on it's own return (the 1120-S), but has a required salary for the "Shareholder-Employee," (which is passed through on a W-2 as any other employee) and then any excess profits above that reasonable Salary and the S-Corp's other expenses is passed to the 1040 on the 1120-S' form K-1, very much like a dividend from a C-Corp but only taxed once, to the shareholder employee.

...

If you choose C-Corp taxation (many times referred to as the regular corporation) you still; have that required salary (still an expense of the corporation on the C-Corps return (form 1120) BUT, here, the Corporation pays it's own taxes at corporate rates (the C-Corp is a truly a separate taxable entity).

...

The once the C-Corp has paid it's corporate taxes, you can then pass dividends out to the owner(s) on a 1099-Div (which is taxed to the shareholder employee at personal rates on the 1040. (This is the double taxation you hear about with C-Corps).

...

Likely the LLC (Limited Liability Company) a hybrid between the sole-propietor (or partnership if there are two owners or more) and the corporation is a good place to start.

...

Provides the corporate Liability protection of the corporation with the low cost, and flexibility, of the sole-proprietor/partner.

...

The fastest growing entity type out there (partially for those reasons).

...

So the ONLY affect on INCOME taxes would be the double taxation for the C-Corp.

...

And for the S-Corp, there CAN be some social security and medicare tax savings, depending on profitability levels, and what a reasonable salary would be for what you are doing for the company ... (coming at the COST of the additional administrative overhead, quarterly payroll taxes, paying in FICA at least monthly, payroll accounting, etc)

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 10 months ago

Please let me know if you have ANY questions at all, before rating me

But if this has helped, and you don’t have other questions, I would appreciate a positive rating (using those stars on your screen – and clicking submit)

That’s the only way JustAnswer will compensate me for the work here.

Thanks,

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Ask Your Own Tax Question
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,884
12,884 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
This is a question on a UK resident's personal income tax on
This is a question on a UK resident's personal income tax on lump withdrawals of funds in a Canadian RRSP using an example with funds expressed in $CAN. Value of lump sum payment from the RRSP is $100… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
How much is UK Corporation Tax on foreign dividends received
Hi Tony,How much is UK Corporation Tax on foreign dividends received from Honk Kong subsidiary?The recipient of such dividends is UK based Limited company. Are these foreign dividends exempt for a "sm… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
SKAT the Danish tax people withdrew 27% of my dividend each
SKAT the Danish tax people withdrew 27% of my dividend each year since 2011. They are willing to refund it down to 15% but I would still eventually pay US tax on that 15% as I withdrew money from my r… read more
abci168
abci168
Principal
27 satisfied customers
What does "Distributions Other Than Dividend Distributions"
what does "Distributions Other Than Dividend Distributions" mean on a corporate tax return? Was the amount listed actually giving to the shareholder? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
I have an LLP (limited liability partnership) with an
I have an LLP (limited liability partnership) with an operating agreement that indicates it's organized as a general partnership. I am the designated 'tax matters partner'. The *other* partner is resp… read more
abci168
abci168
Principal
27 satisfied customers
Question regarding taxation of partnership distributions and
Hi, question regarding taxation of partnership distributions and capital gains … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,310 satisfied customers
I am 50% partner in an LLC, taxed as partnership (form
I am 50% partner in an LLC, taxed as partnership (form 1065). The other 50% partner is my friend. This LLC's only assets were 2 single family houses, which we rented out. In 2016 we have sold both of … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Dividend just received on Shell oil was taxed within IRA.
Dividend just received on Shell oil was taxed within IRA. When I take my distribution it will be taxed again. Is this right? … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,884 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
Does an LLC need to file K-1 forms if they claim no profit
Does an LLC need to file K-1 forms if they claim no profit or loss? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
I have a 2 members LLC (LLC1) taxed as a partnership which
I have a 2 members LLC (LLC1) taxed as a partnership which owns real estate and a portfolio of bonds. I want to transfer the real estate to another newly formed LLC (LLC2) with the same membership str… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,884 satisfied customers
I am preparing a corporate tax return. The company is a
I am preparing a corporate tax return. The company is a payroll company based in NJ but almost all of the clients are in NYC. Is the income generated from NY clients require a NY S corporate tax retur… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,884 satisfied customers
Same question on the taxation of interest and dividends (on
Same question on the taxation of interest and dividends (on mutual funds) earned inside a disclaimed portion trust ... disclaimer trust . The original owner of a trust passed and the spouse declined a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2 FROM HER EMPLOYER WITH A TYPO IN THE SOCIAL SECURITY NUMBER. TO DATE THE EMPLOYER HAS NOT PROVIDED A "CORRECTED" FORM W-2. IS THERE AN IRS "… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
International attorney that can help with double Taxation
International attorney that can help with double Taxation treaty between US and Germany. A US Green card holder in the year 2014 worked in Germany more than 183 days as a doctor, but less than 330 day… read more
taxmanrog
taxmanrog
Master\u0027s Degree
702 satisfied customers
What is the income tax rate if it is not withdrawn from the
Hi! What is the income tax rate if it is not withdrawn from the LLC? The owner has not withdrawn any balance from the business all the amount reinvested into the business. Thank you!… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
In 2014 we filed all Corporate taxes (quarterly, federal
In 2014 we filed all Corporate taxes (quarterly, federal etc) but just now received a letter from New Jersey State IRS (Dept of Treasury) that they have no record of us filing New Jersey Corporate tax… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,884 satisfied customers
A HUSBAND AND WIFE LLC PARTNERSHIP, BEING A PASS THROUGH
A HUSBAND AND WIFE LLC PARTNERSHIP, BEING A PASS THROUGH ENTITY IS OWNED BY THE PARTNERS AND IS NOT A SEPERATE ENTITY. … read more
Brian Michels
Brian Michels
Partner, CPA
Bachelors of Business Administration
154 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x