Self-employed techs

[Rob & Helen Goodale]

I've been registered as an S-Corp for years.  Another major advantage that should be mentioned is that as an "employee" you are insulated from most liabilities.  If some type of disaster occurs and someone decides to sue your butt their only real legal claim is against the corporation.  They can bankrupt the Corp but you are protected, (with the possible exception of gross negligence which you would still have some degree of protection from).  This separation from liability alone is worth it.  It's the cheapest insurance policy you could ever buy.  Much to contrary belief setting your business up as an S-Corp is not very difficult and is relatively inexpensive.  You can do it yourself or your accountant can do it for you.



Rob Goodale, RPT

Las vegas, NV



    One of the biggest benefits of S corp is reduction of self employment tax. Under S corp you hire yourself to do the work. You pay yourself a nominal salary that is subject to normal withholdings- including FICA and the employers share, which amounts to the same as the 15% self employment. The bonus is that you as the owner/majority share holder get to pay yourself dividends off the company's profits. These dividends are treated like interest income and are only subject to ordinary income tax; they not subject to FICA taxes. 

     

    For example, if your business nets $75k per year and you are sole proprietor, you pay 15% off the top for self-employment which is over $11k. Under S corp you could hire yourself for a technician salary of say $25k per year (you make up a "reasonable" number here) and pay the remaining $50k out as dividends. You only pay the FICA taxes on the $25k. This would save you $7500 per year in self employment taxes.

     

    There may be other benefits and/or liabilities. Check with your tax consultant. 

     

    Dean

    Dean May             cell 812.239.3359 

    PianoRebuilders.com   812.235.5272 

    Terre Haute IN  47802
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