We formed an S Corporation 14 years ago and have found it to be a mixed blessing but mostly benefit. We have been drawing Social Security for several years now and our salary is below the threshhold over which one has to begin giving back SS payments. Still working 4 days a week, and the corporation passes through considerably more than the salary. A downside about going to an S Corp is that the tax return is much more complicated than filing Schedule C as a self-employed person, so using an accountant is highly recommended. I wouldn't want to try threading my way through the return myself. In the early years, we paid about $250 for preparing the return; Then our accountant left town for a corporate position and passed us off to an employee; the employee left town (under a cloud?) and passed us off to a friend. We finally decided to take control and chose our own accountant. But the one we chose was more conscientious than the rest and spent perhaps 10 hours (at $100 per hour!) drawing up a balance sheet to tie up all the loose ends like "retained earnings." This in addition to preparing the return. We've been disciplined into keeping tight rein on keeping the figures properly categorized so that won't happen again! Bill Maxim, RPT Maxim Piano Service wmaxim@aol.com
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