6 ms·
Extremely helpful post: insightful and inspiring. This author's comment also underlines the modern situation of the self employed: "I'm a single person LLC wit
by jiiam 10y ago
Extremely helpful post: insightful and inspiring. This author's comment also underlines the modern situation of the self employed:
"I'm a single person LLC with practically zero expenses (I paid a whopping $3k for my MacBook and made $700k), so Uncle Sam is going to get his money. I save a bit based on marginal tax rates, but pretty much I'm SOL because the tax system doesn't understand how a single guy can make so much."
- brianwawok 10y agoHe could have done an S Corp or something to keep more of the profits in the business and avoid paying personal income taxes on all of it, no? Depends on long term play I guess.
- Scirra_Tom 10y agoWhen you want to draw the profits as salary you'd be taxed on it anyway?
- ihsw 10y agoHe can do things with it before giving himself a salary, things that can be taxed less.
- ryanwaggoner 10y agoNot really. I'm not aware of any deductions that he could take as an S-Corp that he couldn't take as sole proprietor or LLC.
- Scirra_Tom 10y agoSuch as?
- defen 10y agoPay people to create art / music / assets for his next game?
- Scirra_Tom 10y agoAre you not allowed to subcontract services and deduct as an expense as a sole trader?
- defen 10y agoI'm not at all an expert on this subject, but if you pay income taxes on your 2015 income, that's less money you have to spend on expenses in 2016. If it stayed in the corporation you might not take as big of a hit.
- deleted 10y ago[deleted]
- codeismightier 10y agoBoth S-Corp and LLC are pass-through entities; there is no difference in terms of tax treatment.
- pbarnes_1 10y agoThere is a massive difference in tax treatment. No self employment tax on distributions from an S Corp.
- brianwawok 10y agoI think this thread proves if nothing else that most programmers, myself included, could very much use an accountant :) We all know stuff, but not all of it is right or complete...
- ryanwaggoner 10y agoYou can't leave profit in an S-Corp without first paying income taxes on it. The real benefit of S-Corp is to shift the cashflow from earned income (subject to self-employment taxes) to profit distributions (not subject to SE tax). But you pay the same Federal income tax on both. However, whether an S-Corp is worth it financially depends on a lot of factors, including how much you make, what constitutes a reasonable salary, your risk tolerance, and how your state taxes these different forms of income.
- dpweb 10y agoShould look into SEP IRA, can set aside 20% of the proceeds for retirement tax free up to 50k. Had a windfall years ago and really regret not doing this.
- steveax 10y agoS Corp doesn't pay Corporate income taxes like a C Corp, but all profit flows through to the owners and is taxed at their personal rate.
- Scirra_Tom 10y agoI don't understand his comment, he made a lot of money and thinks he would of been better off if he had a ton more expenses or something?
- Marazan 10y agoThere are all kinds of deductions available to corporations that are not available to sole traders.
- maxerickson 10y agoWhich ones aren't related to expenses?
- ryanwaggoner 10y agoSuch as? I don't believe this is really true, would love to find some examples though.
- themartorana 10y agoThis isn't true at all. Well, not that I can think of. Solo is tough in that it's easy to "pierce the corporate veil" when it comes to legal liabilities and whatnot, but there's not a thing I can write off now that I couldn't as a solo - well save everything related to employees, but, ya know, "solo." But sub-contractors are a perfectly acceptable expense.
- dboreham 10y agoIf that were true (doubtful) then just create a corporation. Cheap and easy, at least here in these United States.
- megablast 10y agoThings he could have deducted: Electricity, phone, internet. If he worked at home, then part of his rent. Travel if he worked at home and at an office.
- usaphp 10y ago
- cloudjacker 10y agoWell he wasn't a single guy, he had a partner that he gave $276,000 to. That was his expense, as it is a tax deduction and accounted for on his spread sheet. Thats a huge tax deduction and I look forward to writing off my subcontractors from the tax I have to give to Uncle Sam.
- blazespin 10y agoHe could have left the money in the corporation. He's not very smart, tax wise.