| Art Alexion on 8 Dec 2005 13:57:08 -0000 |
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I'd be careful with this. The reason "self-employment" social security taxes are higher that those paid by employees is that the employer pays the difference for the employee. S-corps (and LLCs) are taxed as individuals, not corporations. This has the benefit of avoiding double taxation (The corp pays the tax on its income, and then the employees pay the tax again on their pay. True C-corporations are "persons" under law.) S-corps and their owners do not pay taxes separately. (S-corps with multiple owners and non-owner employees are taxed as partnerships. An information return is filed, but the taxes are passed through to the owners.) C-corps, which do pay their own taxes must pay a share of their employees' social security taxes, with the balance being withheld from the employees' pay checks. Disclaimer: I am not an accountant nor a *tax* lawyer, but raise these issues (not advice, mind you) from personal experience. John Von Essen wrote: >If you are self-employeed/contractor, there are two things to think about. > > >2. If you are being paid on 1099, in addition to above insurance, there is >an easy way to get out of paying social security tax. Become incorporated. >This provides alot of good features, main one being that your assets >cannot be used when you are sued, etc.,. In PA, you can form an S-Corp for >about $400. The 1099 payments go to your Corporation, and your corporation >pays "you" a W-2 salary. This way, "you" only pay the same tax you would >if you were employeed by any other company. Since you are currently the >only employee, you have 95% of company profit go to you as a salary. Of >that remaining 5%, your corporation files a tax return, and you only pay >social security on that small 5%. > >This is why tax laws favor businesses and not individuals. So if you stand >to lose more then $400 via social security tax, then incorporated. And if >you intend to seriously persue the business, it will be better in the long >run. > > >On Wed, 7 Dec 2005, sean finney wrote: > > >>but ianal, and ia definitely n an accountant :) >> >> -- _______________________________________ Art Alexion Arthur S. Alexion LLC PGP fingerprint: 52A4 B10C AA73 096F A661 92D2 3B65 8EAC ACC5 BA7A The attachment -- signature.asc -- is my electronic signature; no need for alarm. Info @ http://mysite.verizon.net/art.alexion/encryption/signature.asc.what.html Key for signed PDFs available at http://mysite.verizon.net/art.alexion/encryption/ArthurSAlexion.p7c The validation string is TTJY-ZILJ-BJJG. ________________________________________ Attachment:
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