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I am trying to decide which tax filing to use in order to…

Customer Question
I am trying to...

I am trying to decide which tax filing to use in order to protect my new business. I pay child support. By no means am I trying to curve my responsibility to pay. However I am trying to pay myself a paycheck so child support is calculated from that, and all other income stays in the business for expenses and day to day operations.

Accountant's Assistant: What steps have you taken? Have you filed any papers in family court?

I currently have a day job and have been paying child support from those wages since my divorce 2 years ago

Accountant's Assistant: Family law varies by state. What state are you in?

Texas

Submitted: 4 months ago.Category: Tax
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Answered in 12 minutes by:
3/21/2018
Tax Professional: Barbara, Enrolled Agent replied 4 months ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,424
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Which tax filing to use as far as what entity type?

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Customer reply replied 4 months ago
Correct, I am currently filed with the state of Texas as an LLC. However, for tax purposes I am considering filing as an Scorp at the recommendation from my bookkeepers office.I am trying to protect the financial health of my construction business from being attacked by my ex wife. I want to collect a reasonable salary from my business that will be used in the calculation of child support.Construction business expenses are high and the cost to run are high and fluctuating. Some customers take months to pay and the requirement for immediate capital is high. I can not afford to keep my business running if the entire income/business profits are used for calculating child support.Im new to this and want to make the right decision for both my son and my business.
Tax Professional: Barbara, Enrolled Agent replied 4 months ago

An LLC and an S corporation are very similar.

Having an S corporation involves more paperwork and has stricter rules than an LLC.

An S corporation is a pass through entity which means that any profit/loss flows through to the shareholder (you) in addition to any salary you pay yourself. The S corporation will file its own tax return but will pay no tax.

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Customer reply replied 4 months ago
Does this mean that in regards ***** ***** support calculation, filing as an LLC and SCORP is the same?
Tax Professional: Barbara, Enrolled Agent replied 4 months ago

As far as your income, with an LLC it is the net profit shown on Schedule C.

With an S corporation, it will be your salary plus your profit, whether or not you leave the additional in your business or not.

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