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Yeah, I see something similar about the capital gains debate. You only pay capital gains when you /sell/ your business. If you want to take money out of an e
by lsc 15y ago
Yeah, I see something similar about the capital gains debate. You only pay capital gains when you /sell/ your business. If you want to take money out of an existing business, you have two options; issue a dividend (and pay both corporate taxes /and/ capital gains taxes, which usually makes the second option attractive) or pay yourself bonus/salary at the usual tax rates.
A lower capital gains only helps you if you are building to flip.
- SomeCallMeTim 15y ago>issue a dividend (and pay both corporate taxes /and/ capital gains taxes This is only true if you're a C-corp. I know on HN most folks are creating a C-corp because it's easier to invest in, but if you're doing a small business, a partnership, S-corp, or LLC filing as an S-corp are likely the best options for you. In all three of the latter cases, taking money out only causes you to be taxed once.
- lsc 15y agoright, I'm an S corp. you get taxed once, but you pay the income tax rate, as if it were salary or bonus, so you still end up paying well north of twice the capital gains rate.