Assuming a S corp with you as the sole owner, the only tax advantage of salary vs. draw is FICA and Medicare. Once the salary goes above FICA limit (~100k), then it's only Medicare. Marginal income tax rate will be the same if its salary or S corp distribution.
Now if you're comparing to a c corp, then s corp has the very real advantage of avoiding double taxation.
Quote:
|
With an S Corp you can pay yourself a "reasonable" salary, then take draws above and beyond at potentially much less tax rate. I was told an S Corp adds additional levels of liability protection compared to an LLC
|