1
TIL you can file for S-Corp status online in most states now
My accountant mentioned it after I complained about paperwork, and I found the form on my state's SOS site in under 10 minutes. Has anyone else switched to S-Corp and seen a big difference in self-employment tax savings?
3 comments
Log in to join the discussion
Log In3 Comments
henry_anderson547d ago
You said "self-employment tax savings" but thats not quite right. The real benefit with an S-Corp is you can pay yourself a reasonable salary and then take the rest as distributions, which avoids the 15.3% self-employment tax on that extra money. But you still have to pay yourself a salary through payroll and deal with all that quarterly filing. Its not like you just flip a switch and save money automatically. The savings only kick in if your business income is high enough to justify the extra payroll costs and paperwork.
5
the_hayden7d ago
Reasonable salary" is where it falls apart for me. The IRS has no clear definition, so you're basically guessing. My CPA ran the numbers and even with a modest $50k salary plus payroll costs, the savings didn't kick in until I was clearing over $80k net profit. Below that the extra filing fees and payroll tax actually cost me money. It's not a magic bullet for everyone.
5