4 ms·

Please correct me if I'm wrong, also I assume you are in the US... I did this for a while, but it starts to hurt around tax season. There are advantages

Please correct me if I'm wrong, also I assume you are in the US... I did this for a while, but it starts to hurt around tax season. There are advantages to being incorporated and then hiring yourself as an employee for a minimal wage. With the way you're doing it, you're paying employment taxes on your entire income. With an LLC, you can pass the majority of it through without paying that. So you are paying corporate tax rate on the profits of the company, then personal tax rate on your "minimal wage". How does the money from the company get passed to you without any tax hits?

sbjustin 8y ago
He's likely an llc taxed as an S-Corp. You don't pay taxes out of your business, profits after write offs are added to your return with a K1. You're likely thinking of a C-Corp.
- maratd 8y ago
  Yes, that's exactly it. As an S-Corp the corporation doesn't pay any taxes. Well, in my case my state (New Jersey), has a minimum tax based on revenue. I pay that, but it's minimal. If it really bothered me, I could re-incorporate as a Delaware or similar LLC. All profits are passed to your individual return and you pay taxes on that.
- mathrawka 8y ago
  With the K1, you will be adding the passed through income to your personal income and still paying tax on it. I'm not seeing the benefit of an S-Corp here.
  - maratd 8y ago
    See my comment here: https://news.ycombinator.com/item?id=19527078 https://news.ycombinator.com/item?id=19527078