You are employed by a publicly traded corp. where you make $60,000.00 per year. You also about to start your own business, while maintaining you other job. You have been advised that you can act as a sole proprietorship or create your own S Corporation. You were told that S Corporation are good only because even though you will make $110,000.00 net profit, you only have to pay $50,000.00 of that out as reasonable wages to yourself for services rendered. The rest flows through payroll-tax free as an S Corporation distribution. Looking only at the payroll taxes, the excess FICA credit and self employment taxes only.analyze which structure would result in lower taxes.
I understand that the information is incomplete but I am in a discussion that is only concerned with the above taxes and nothing other then those. I have had the discussion that the MTR has to be also included is this true or not?
Thanks a lot