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Mon, May 18 2026, 12:52:28Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: 12345[6] ]


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Date Posted: Mon, April 07 2003, 22:39:37
Author: Brian Onyango
Subject: Re: To incorporate or not?
In reply to: Brent D. Gardner, ChFC 's message, "Re: To incorporate or not?" on Sat, April 05 2003, 14:09:54

>There is one unique advantage to the S-Corp that makes
>it appealing to small businesses. All profit from a
>Sole Proprietor and an S-Corp pass through to your
>1040 as income, subject to FICA and Medicare taxes.
>
>But...Dividend income from a S-Corp, while taxable as
>ordinary income, is NOT subject to payroll taxes, like
>FICA and Medicare. The key is that you should pay
>yourself a salary that is "reasonable" for your job
>title and location, and then pay out excess profits in
>the form of quarterly dividends. The savings on FICA
>and Medicare can make this worth while, and my CPAs
>tell me that it passes muster with the Service.
>
>All that said, I strongly encourage you to seek out
>the advice of competent legal counsel.

Thanks for the very helpful info. Cheers.

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