Dean, Very interesting. But would that have an impact your social security payout at retirement? David Weiss From: Dean May To: 'Pianotech List' Sent: Sunday, October 07, 2007 8:50 AM Subject: RE: Self-employed techs One of the biggest benefits of S corp is reduction of self employment tax. Under S corp you hire yourself to do the work. You pay yourself a nominal salary that is subject to normal withholdings- including FICA and the employers share, which amounts to the same as the 15% self employment. The bonus is that you as the owner/majority share holder get to pay yourself dividends off the company's profits. These dividends are treated like interest income and are only subject to ordinary income tax; they not subject to FICA taxes. For example, if your business nets $75k per year and you are sole proprietor, you pay 15% off the top for self-employment which is over $11k. Under S corp you could hire yourself for a technician salary of say $25k per year (you make up a "reasonable" number here) and pay the remaining $50k out as dividends. You only pay the FICA taxes on the $25k. This would save you $7500 per year in self employment taxes. There may be other benefits and/or liabilities. Check with your tax consultant. Dean Dean May cell 812.239.3359 PianoRebuilders.com 812.235.5272 Terre Haute IN 47802 ------------------------------------------------------------------------------ From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf Of Greg Newell Sent: Saturday, October 06, 2007 10:20 PM To: Pianotech List Subject: RE: Self-employed techs David, A year or two ago I switched from Sole Proprietor , which I was for almost 20 years, to a LLC. It was explained to me that I needed some protection against law suits etc. Recently I reunited with my cousin who just happens to be an excellent book keeper. She insists that she will be able to put a great deal of money back in my pocket by switching me to a sub S Corp. I don't pretend to know anything about it and strangely enough, I'm quite ok with that. I'll let her figure out all that stuff and I'll try to keep doing what I do and just maybe it'll work out in the end. Or maybe I'll be busy enough not to notice anyway. all the best, Greg Newell At 10:25 AM 10/6/2007, you wrote: Has anyone explored the differences between forming an LLC and an S Corporation and the benefits of going that route as opposed to a simple sole proprietorship? If anyone can direct me to good literature or share their own experiences on the subject, I'd appreciate it. David Love davidlovepianos at comcast.net www.davidlovepianos.com Greg Newell Greg's Piano Forté www.gregspianoforte.com 216-226-3791 (office) 216-470-8634 (mobile) 2003,04,05 & 06 winners of Angie's List Super Service Award -------------- next part -------------- An HTML attachment was scrubbed... URL: https://www.moypiano.com/ptg/pianotech.php/attachments/20071007/eec77a4c/attachment.html
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