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Would an S-corp or LLC be more beneficially in regards to…

Would an S-corp or LLC...
Would an S-corp or LLC be more beneficially in regards ***** ***** for my situation?
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Answered in 2 minutes by:
3/20/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,735
Experience: Taxes, Immigration, Labor Relations
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I will help you with determination,

but please tell me about your current situation....

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Customer reply replied 1 month ago
I recently sat down with a business lawyer to discuss my situation, and we came to the determination that a C-corp would not be beneficial for my tax situation due to the net profit I expect, versus what I would have to pay at the corporate tax level. I dabbled with the idea of a C-corp classification, to avoid net profits that I plan on keeping within my business, to be used for my child support calculation. I plan on maintaining my w2 employment job which I gross approximately 75k per year, and I do not plan on taking a salary, or any net profits for personal use, since I have my w2 position to keep me afloat.I can conservatively expect to net 30-40k my first year with the company. I was advised by the business lawyer that by filing as an S-corp, due to new laws in place, my business would have the first 20% tax free. Is this true, and is there any recommendation based of my personal situation to help determine which choice would be better for whether it be LLC, LLC taxed as an S-corp, or just filing as an S-corp. Also, my business would be in sales/marketing within the medical field, basically obtaining patient referrals for medical devices, and forwarding the business to a corporate office for them to carry out the order. I do not plan on having any employees, but may pay independent contractors marketing/finder fees for business acquired.Thanks

We need to look for optimal solution based on all factors.

Form tax prospective - may be S-corportaion is better option,

but when you bring other issues - such as child support , etc - and want to shield some income - that is a different issues - and depending how important that will be for you - you might want choose that option even you might have larger tax liability.

So - if we strictly look from tax prospective - I woudl agree with your S-corporation choice.

The new tax law reduced corporate tax rates - so in order to pass that reduction to small businesses that rare use C-corporation status - the Congress came up with 20% business deduction for all small businesses that pass income to owners.

With S-corportaion - you will be required to pay yourself reasonable wages - thus - you will need to set a payroll - so you will have another W2.

The rest of income will be passed to you on K1 - and will be only subject to income tax.

Let me know if you need any clarification or details.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,735
Experience: Taxes, Immigration, Labor Relations
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