Quote:
Originally Posted by jwasbury
Sorry guys...this is my line of work so I feel compelled to educate on the correct terminology. In an S Corp, you must pay yourself a reasonable level of compensation which will be reported on W-2 and taxed in the normal way. Excess S-Corp profits above what you pay out as compensation will pass through to the shareholder's 1040, and are taxed at ordinary income rates (no FICA, Medicare, etc.). Those profits can then be distributed to the shareholder's if desired with no further tax consequences. The distinction is compensation vs. distribution of corporate profit (a.k.a. dividends)
|
So as a rule of thumb roughly what $ number would you want before an S-corp becomes worthwhile?