Is an LLC Necessary?

You changed what we are talking about you cant just compare fica.

The employer (YOU) will pay approx 4K to 5k in the employers portion of the tax

Then the employee (YOU) will pay your portion of taxes (as stated above)

Then YOU will pay self employment tax on the dividend. The dividends aren't free money.

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A lot has to do with how you take the dividends if taken incorrectly or even correctly you will get double taxed, take it as a salary and you are 1099 and pay self employment tax.

Again the IRS has leveled the playing field.
 
If only there were politicians that wanted to do away with the IRS...
 
Please understand these are my numbers in Ca. Don't take my advice get a CPA, but realize the CPA makes money of you, so charging you 2K a year to save you 2K a year is a wash for you, but the CPA just made an extra 2k.

All the math came from online payroll calculators, you have to look at what it costs as an employer (you) and employee (you) and there are also online calculators for Self Employment tax.

Now go be frosty.
 
Wait a second. Are you saying if I take $50k as a w-2 and $50k is paid out as dividend from the sub chapter s then the dividends are fica taxed? I'm 98% sure that's not correct. That's the whole pt in having a sub chapter s to avoid paying fica.
 
Wait a second. Are you saying if I take $50k as a w-2 and $50k is paid out as dividend from the sub chapter s then the dividends are fica taxed? I'm 98% sure that's not correct. That's the whole pt in having a sub chapter s to avoid paying fica.


No but you will pay tax on it, how it is taxed will be determined by it's designation, could be double taxed.

Also do you get what I am saying about the W-2 wage basically being double taxed too? Because it is all your money.
 
No I don't understand. Why are the w-2 wages double taxed? It's w-2 ed to you and yes your corp is paying it(Your Money) but the corp is writing it off 100% against its gross deposits. Also in what instances could the dividend be subject to fica?
 
No I don't understand. Why are the w-2 wages double taxed? It's w-2 ed to you and yes your corp is paying it(Your Money) but the corp is writing it off 100% against its gross deposits. Also in what instances could the dividend be subject to fica?

It is a 100% write off, but it's not like you get the money back, depends how the dividends are classified a draw or not.

Again my situation is different because I make too much but really not enough. So yes I save doing it with a 50/50 split but it's not much because my W-2 wage is too high.

But that said, is the saving worth the Fee's, more to tax guy, more to get non-resident licensed, yearly fees to state etc.

The problem with forum conversations is they go in 20 different direction. :)
 
By taking a W-2 wage (which you cannot do if you're an LLC single party)

Not true if you elect to be treated as an S-Corp. I have an LLC and I'm the only employee. I pay myself a salary (W-2) and distributions.

and then taking a drawl doesn't ultimately save you money.

Does it have to be a southern drawl? :D I prefer just taking a draw. And it can save you money depending on your total income. There was a time when I paid myself about $75k and took a draw of $75k. Not having to pay 12.4% on the difference between $75k and the top limit (we'll just say $115k), means a savings of $4,960 ($40k x 12.4%). My fees to the CPA, annual registration and unemployment are much less than $5k.

The problem now is doing a 50/50 split (salary and draw) still puts me over the social security limit so there's no tax savings.
 
Not true if you elect to be treated as an S-Corp. I have an LLC and I'm the only employee. I pay myself a salary (W-2) and
distributions.

You are correct.


Does it have to be a southern drawl? :D I prefer just taking a draw. And it can save you money depending on your total income. There was a time when I paid myself about $75k and took a draw of $75k. Not having to pay 12.4% on the difference between $75k and the top limit (we'll just say $115k), means a savings of $4,960 ($40k x 12.4%). My fees to the CPA, annual registration and unemployment are much less than $5k.

The problem now is doing a 50/50 split (salary and draw) still puts me over the social security limit so there's no tax savings.

California fees are higher and I get charged about 4k a year to do my taxes, I am also above the threshold. It is a fun stupid game.
 
California fees are higher and I get charged about 4k a year to do my taxes, I am also above the threshold. It is a fun stupid game.

My corporate taxes are $750 and my quarterly filings are $650 per year. I think the annual registration is $50 and my unemployment is about $300. That's $1,750. I used to save more than that in taxes. Now I almost feel like I'm wasting money by having it set up this way. Anything that is allowable to pay through my corporate account I do. I just wish I could pay for more through the corporate account. Anybody out there paying for a country club membership through your company? My CPA says I can't. Yet I know a guy who is. My CPA says he just hasn't gotten caught yet.

The one good thing is since it's just me, I can put a good bit in my SEP IRA and not have to worry about funding any employees accounts.
 
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