Solo Agent: Sole Propietor, Corporation, or LLC?

[MW Agent]

When I was captive, I had a 21k base making over 100k... That company is now doing 25k base for new hires.

I think it is reasonable.

I would imagine your commissions paid above your base were still W2 income? It's likely not a return I would sign off on, but that being said, it still amazes me how many returns report zero W2 compensation.

 

[sirherbie]

So you're telling me you made $100k and only took $21 k of w-2 and $79k of non fica distributions. Is the $79k taxed at the dividend rate of 20% or is it taxed at your income tax rate? It seems hard to believe the irs allows this. Also with an lic with sub chapter s election do you have to get licensed with the state as an llc with each company?

 

[MW Agent]

So you're telling me you made $100k and only took $21 k of w-2 and $79k of non fica distributions. Is the $79k taxed at the dividend rate of 20% or is it taxed at your income tax rate? It seems hard to believe the irs allows this. Also with an lic with sub chapter s election do you have to get licensed with the state as an llc with each company?

It's on their target list for audits for businesses that severely under report their W-2 amount. The $79K of K-1 distributions is taxed at your income tax rate. With an LLC or S-Corp, you register with the state. You will likely need an agency license with the state in order for the carriers to pay you under your businesses tax ID number. You would then file a new W-9 with your carriers showing the businesses tax ID so they 1099 the business, not your social security number.

 

[cadylou]

My understanding with an s corp is that your distributions--non diva monies--cannot exceed the salary you pay yourself.

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My understanding with an s corp is that your distributions--non diva monies--cannot exceed the salary you pay yourself.

I meant non "fica " monies--not "diva"---damn auto correct. . .

 

[sayedhesham]

It's Nice Job u did

 

[agentinsouth]

My understanding with an s corp is that your distributions--non diva monies--cannot exceed the salary you pay yourself. ---------- I meant non "fica " monies--not "diva"---damn auto correct. . .

I don't know about a pure S Corp. however, that is not correct w/ an LLC, S Corp selection. The reason so many people do it is because you give yourself a low base and higher distributions.

 

[sman]

I don't know about a pure S Corp. however, that is not correct w/ an LLC, S Corp selection. The reason so many people do it is because you give yourself a low base and higher distributions.

Can you cite a source?

 

[sirherbie]

I just find it hard to believe the irs would no see this as willfill tax avoidance and conduct an audit and disallow. During that audit who knows what else they find

 

[agentinsouth]

Can you cite a source?

No- otherwise I would be a CPA and not in insurance..... To answer your question ...My very expensive CPA... He is known as the best in town... Most if the self employed. Millionaires I know are also set up this way.

 

[OttoGraf]

So why does it seem that cpa's are split on this 50/50?