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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2309
Experience:  Certified Public Accountant
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I am an internet marketing specialist, should I form an LLC

Customer Question

I am an internet marketing specialist, should I form an LLC or C corporation for the lowest tax liability?
JA: The expert will know how to help. Please tell me more, so we can help you best.
Customer: My business is in California.
JA: Is there anything else the expert should be aware of?
Customer: I'm retired, very low tax liability.
Submitted: 2 months ago.
Category: Tax
Expert:  Mark Taylor replied 2 months ago.

Hi, my name is Mark. I will be happy to help you with your questions. How well do you expect the LLC do you?

Expert:  Mark Taylor replied 2 months ago.

If you own 100% of a LLC it would be reported as a schedule C on your individual tax return. The net income from the LLC would be subject to both income and self-employment taxes. Self-employment taxes would be 15.3% of the first $118,500 of earned income. If you formed a C-Corporation you would be subject to two levels of taxation. The net income from the Corporation would be taxed. Then when the income is distributed to you it would be taxed again as a dividends. You would be able to control the amount of income by paying yourself wages. So with a C-Corporation would would have some additional administrative responsibilities. You would need to file a separate tax return (Form 1120) and you would need to file payroll tax reports (941, 940, w2's, w-3, and state reports). California has a minimum tax for both LLC and C-Corporation of $800. This fee is waived in the first year.