07-28-2007, 04:14 PM
[quote mattkime]>>If she's doing more than about $30k/yr gross, she should consider a corporation and not a sole proprietorship. The tax savings will more than pay for a good accountant to do the work for you.
hm, can you explain how that works out? i was under the impression that corporate taxes + personal is greater than personal + self employment. maybe it depends when you live. i live in nyc.
The only tax, for example, an s-corp pays is payroll tax. Depending on the entity type, a corporation is taxed at a much lower rate. When I switched from a sole proprietor to s-corp, I started having to spend about $1k/yr to have my taxes done rather than about $400. Structured correctly, at $30k/yr, having an s-corp will save one (very) roughly $5k/yr. That's a $4k net savings.
Plus there's also the asset protection benefits.
Anyway, back to the sales tax issues - also find out if the county and city you'll be selling in collects sales tax.
hm, can you explain how that works out? i was under the impression that corporate taxes + personal is greater than personal + self employment. maybe it depends when you live. i live in nyc.
The only tax, for example, an s-corp pays is payroll tax. Depending on the entity type, a corporation is taxed at a much lower rate. When I switched from a sole proprietor to s-corp, I started having to spend about $1k/yr to have my taxes done rather than about $400. Structured correctly, at $30k/yr, having an s-corp will save one (very) roughly $5k/yr. That's a $4k net savings.
Plus there's also the asset protection benefits.
Anyway, back to the sales tax issues - also find out if the county and city you'll be selling in collects sales tax.