Hot answers tagged s-corp
5
I'm in the process of converting from an LLC to a c-corp, so I can give you some perspective:
To start, try searching for sample c-corp bylaws and scan a few pages. Every well-formed c-corp has bylaws -- the laws by which your corporation is governed. Most bylaws are dozens of pages used to describe board meetings and fiduciary duties and so-on.
It's a ...
4
Articles of Incorporation are generally considered public records that anyone can access. Sending him a copy is not giving him anything that he could not get from the Secretary of State's office anyway.
If what he wants to do is verify that you are legit, that is a corporation in good standing, he should verify that for himself directly with the Secretary ...
4
There's no tax on S-Corp distributions. There's tax on your income. It is called "ordinary income" and is taxed at your marginal tax rate. There's no difference between the first 50K you got as salary and the second 50K you got as distribution in that respect - they're both taxed at your ordinary income rates. The salary portion is also subject to the ...
4
There are definitely tax reasons to pay out dividends and not salary (primarily - lower tax rates on qualified dividends, which may expire at the end of the year, and the absence of the FICA and payroll taxes).
However, personal services C-corporations are taxed at higher (flat) 35% rates, which may not be the best rate with lower income corporations. ...
3
I formed my corporation with an online service. My opinion is, if there is anything special, YOU have to invest time to undestand what to do.
The laywer will only expose the options, but will ask you to decide anyway. So, by the time you dig into the legal/tax implications, you are ready to go for a generic service (and the cheaper, vanilla option). This ...
3
If you wish to do this then you should consider C-corp status.
The simple answer to your question is, "No", but it looks like you are looking for more detailed ways to play games with revenue, etc. (based on the comment(s) you have for other response(s).)
You need the help of an accountant and/or attorney. You should probably get professional help for ...
3
LLC is not corp... You should start with clarifying the requirements. S-Corp is a tax term, legal entity is "Corporation" or "LLC" (they can both be S-Corp's for taxes).
Corporations and LLC's are very different entities, and I personally would prefer LLC (have preferred LLC, to be more exact), as it is much simpler. For corporations you need directors, ...
3
I'm no tax attorney. Having said that, as @rbwhitaker mentions, the question of when you start to take a salary has already been asked.
However, from a tax perspective, as I understand it, it makes no difference if you take a salary or not if you're an S-Corp. With an S-Corp any profit that the company generates automatically flows to your own personal ...
3
This IRS article has a good explanation:
Wage Compensation for S Corporation Officers
The key phrase for you:
The amount of the compensation will never exceed the amount received
by the shareholder either directly or indirectly. However, if cash or
property or the right to receive cash and property did go the
shareholder, a salary amount must be ...
2
You can be an S corporation shareholder if you are a resident alien (a green card holder).
If you are a non-resident alien, you can be a shareholder - then the corporation will automatically convert from S to C.
You cannot solve your problem by creating an intermediate entity, because that entity cannot be an S corporation shareholder.
Disclaimer: This ...
2
You should seek a tax professional to help you with that. I'm a tax professional, so a disclaimer is required: nothing I write here was intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on any taxpayer.
You only have to pay yourself a salary if you have net income from the ...
2
In a comment you mentioned additional shareholders.
With multiple shareholders, it is not likely that you will even issue shares correctly with an online formation service, let alone put into place provisions that one normally would see in a stock purchase or shareholder agreement, such as those pertaining to share vesting and transfer restrictions.
If you ...
1
I'm assuming you're in the US.
Why do you think you need to incorporate? What's wrong with setting up a partnership agreement for each project and be done with it?
From what you just described, incorporating will probably cause more harm then benefit. If you're concerned with liability issues, consider professional liability insurance.
Anyway, discuss ...
1
Only a limited liability company allows you to separate yourself from personal liability, along with the attendant regulatory filing overheads. However, you have to ask yourself what is your degree of personal liability if undertaking a micro-business. Tax benefits are only worthwhile if individual tax rates are higher than corporate (which unless you have ...
1
As a practical matter, the issue is not complexity: Usually it comes down to holding annual shareholder and board meetings and preparing minutes of those meetings (or written consents in lieu of meetings).
When I help clients with this process, it usually takes just a couple of hours, so it is no terribly expensive. Please see Annual Meetings: The Basics.
...
1
Not really complex. Shareholders' annual meeting, board meetings, share issuance, maintaining minutes, corporate secretary, officers need to be on the payroll, double taxation on income.
Actually, quite complex. But manageable. If you can't do it yourself, you can always pay a lawyer to be your corporate secretary and take care of the bureaucracy.
1
Our clients have used a structured sale, which is based on IRC 453. It allows deferred installment sale treatment. So you can defer the tax obligation into the future while earning interest based on your risk tolerance. Feel free to contact me with any further questions. Chris Princis, Brook Hollow Financial. cp@brook-hollow.com
1
As mentioned, you're an employee so you need to take funds out of your s-corp as an employee. I'd recommend using Intuit Online Payroll to pay yourself as an employee. For Costco members, it's about $25 per month ($39 if you purchase from their web site) for up to 5 employees.
Intuit will help you setup yourself as an employee, enable you to perform really ...
1
How you withdraw money, technically, is of no importance.
But you have to pay yourself a reasonable salary. You cannot pay yourself as a contractor for work performed for your S-Corp. Yes, it means you'll have to pay payroll taxes and expenses.
1
Adding shareholders to the mix adds a level of complexity that makes it difficult to use simple "incorporate for $99" services. Plus, there are tax implications, additional documents to file (with time limits) etc.
I would suggest looking at the founders workbench http://www.goodwinfoundersworkbench.com/ and consider using their incorporation documentation ...
1
If an employee is also a 2% or more shareholder in an S-Corp, then he or she is classified as such for purposes of taxation of fringe benefits regardless of whether the relationship involves any work in the corporation.
A strategy worth considering is to elect out of S status, run the corporation as a C corporation and then, at the end of the year, pay some ...
1
Yes, the IRS does consider those two to be different roles, and each has their own set of tax rules. If you receive income without being actively involved in the business, that income is usually categorized as passive income. Basically, the IRS treats such a shareholder as an investor, and not as a contributing member of the company (I.e. Does not have any ...
1
Everything applies in the publication unless you are a 2% or greater owner in a S-corporation or highly compensated employee. The rules are designed for employees, not employee-owners, such as large shareholders in a S Corporation or Officers.
As for 2%> shareholders, the publication itself says: "Treat a 2% shareholder as you would a partner in a ...
1
You're right, non-US citizens can't be a shareholder of an S Corporation.
You always have the option of converting your S Corp to a C Corp, where non-citizen shareholders are allowed. Converting from one type of business to another is not trivial, and there's a lot to think about, financially and legally, but people do it. (Just be sure to talk to all ...
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