I think I fucked up...

[kidChaos]

You're going to be taxed the same rate "self-employment" tax regardless.

LLC, S-Corp, Sole Proprietor, Partnership... It's all a matter of formality and liability.

With an S-Corp, you pay half the tax as the employee (on your W2), and the company/entity pays the other half.

Additionally, if you claim the max cap taxed for social security as your salary ($97k I think? Something like that) You can still take millions in dividends without issue.

The biggest issue is if you're paying yourself $5k salary and then pulling 6 figures in dividends.

Just claim you're an 'Internet Engineer' or 'Web Architect' a reasonable salary is easily $80-90k and you shouldn't have an issue with your dividends. A CPA should be able to give you real numbers versus vague assumptions.

Also, if you're in the USA contact SCORE, they typically have retired executives you can meet with for free. I got most of my initial tax/accounting advice from a retired CPA who also worked for the IRS doing audits for a number of years. Fucking golden.

 

[imincognita]

Can you give me a quick idea of how much I'd save with an s-corp over a s-prop if I made $150k/yr in South Dakota?

I'm not trying to be evasive, but the best advice I can give you is to not take tax advice from someone on an AM forum.

Your new CPA is on the ball. And she is correct - the savings are generally reduced or eliminated by the additional fees for preparing the extra returns required of an S-Corp.

And FYI - I represented a self-employed client in a compliance audit a couple of years ago. Every line of the tax return with a value in excess of $100 was strip-searched. The revenue agent was in my office eight hours a day for a solid week. You do not want to have to defend a frivolous position in such an intrusive audit. Fortunately, in my case, it resulted in no change. I mention this because of references here about finding an "aggressive" accountant.

If it sounds to good to be true...