Anyone use this tax stategy?

Discussion in 'Business Operations' started by Royalslover, Apr 12, 2007.

  1. Royalslover

    Royalslover LawnSite Senior Member
    Posts: 382

    I just got my taxes back from my tax man. I had a friend over and she was horrified at how much my self-employment tax is. She told me that her mother is self employed and her cpa set her up on a different deal. This is the best I understand it. You set yourself up as an S corp. You then pay yourself a small monthly salary on which you pay income and SE tax. The rest of your money is paid through dividends or property distribution on which you pay income tax but no SE tax. If I had done this I would owe about $3000 instead of $11000. What say you?
     
  2. jbone

    jbone LawnSite Member
    Posts: 125

    I think you really need to research it. Im not sure exactly how s corps work but.... They are often taxed heavily as a business, are harder to form (lots more legal bs) blah, blah blah. Just be careful before you do that and completely understand how it effects you positively and negatively. You may save all that money one way and end up having your business suffer in another.
     
  3. TSG

    TSG LawnSite Senior Member
    Posts: 444

    From a tax standpoint it is better to be an S corp than an LLC
    If your landscape company is your second job, stay a sole prop and
    buy a little more Ins
    Get your acct and attorney in the same room

    Just .02
    Alan
     
  4. lawnboyblake

    lawnboyblake LawnSite Member
    Posts: 89



    But,
    From a tax standpoint, is it better to be a sole prop? This is the problem I'm having. Would have no problem S corp or LLC if it can save me on some taxes....
     
  5. MILSINC

    MILSINC LawnSite Member
    Posts: 175

    as an s corp, you will pay 1/2 the tax you would as sole prop. fact.
     
  6. MarksTLC

    MarksTLC LawnSite Member
    Posts: 49

    Then why isn't everyone an S corp.

    Seriously. I'm not trying to start anything - I'm curious.....

    My acct. never mentioned any tax advantages in becoming an S corp or LLC.

    I think I need a new acct. :hammerhead:
     
  7. haybaler

    haybaler LawnSite Senior Member
    from ma
    Posts: 511

    LLC has nothing to do with taxes, it's the same as sole prop. the only difference is LLC covers your personal assets. S corp may save you taxes, but ask a professional all the details.
     
  8. Can I Mow Your Lawn?

    Can I Mow Your Lawn? LawnSite Member
    Posts: 35

    LLC's can elect to be taxed as S-Corps with IRS.

    Later,
    Can I Mow Your Lawn?
     
  9. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    That's what John Edwards does.

    It can be frowned upon if you use it out of proportion.

    For what is is worth I would have rather been a S-Corp than a LLC but my business partner is a resident so we could not go that route.
     
  10. spazfam

    spazfam LawnSite Member
    Posts: 146

    Correct me if I am wrong a s corp would be taxed as a business and you then are taxed for income you were payed.Therefore double taxation. An LLC passes all income and losses directly to the partners or members income. We are are a DBA of a LLC.
     

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