I have been recommending to self-employed people here in the UK to set up a limited company if they can, as taxes on dividends in this country are much lower th

I have been recommending to self-employed people here in the UK to set up a limited company if they can, as taxes on dividends in this country are much lower than those on pay. If you reduce your salary to a small (but not unreasonable) amount and withdraw extra money form the company in dividends, is a legal and perfectly reasonable way of saving on your taxes. However I do not know if this strategy would provide any benefit in the US tax system. I guess it depends on the state you live in.