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From speaking with a few published authors, the creation of a private C-corp is standard practice to spread income from advances and royalties out over a longer
by alttag 15y ago
From speaking with a few published authors, the creation of a private C-corp is standard practice to spread income from advances and royalties out over a longer period, which provides not only lower taxes, but a steady(-ish) income stream.
- tdfx 15y agoAssuming I'm understanding the double tax correctly... wouldn't that still be taxed at the corporate tax rate and then taxed again when it's paid to the employee? I can't imagine a situation where that would be less expensive than being taxed one time, even at the highest income bracket.
- alttag 15y agoI'm not a tax professional, but corporations are taxed on income, not revenue. Tax preparation fees, travel costs, conference registrations, pension contributions, and other expenses of the "small business" author (computer, internet, mailing manuscripts) all turn in to usable money that isn't taxed. (Via income tax, I mean. In some cases property taxes may apply.) Expense tracking becomes more of a chore than for the average wage earner, but there are trade-offs. The author's "corporation" can also manage paid salary from year to year to correlate with deductions or navigate tax brackets, further minimizing any double-tax effect.
- tdfx 15y agoI file as an S corp and deduct all of those expenses, as well. Except the money I pay myself as a salary is not counted as income on my business tax return... my understanding is that for a C corp, it would be.