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Multiple businesses, which entity?

johnqhjohnqh subscriber Posts: 4
edited November 2007 in Selecting a Business
I have one business in C-corp. Planning to start another one with a partner. I am considering either C-corp or S-corp.
The problem is the tax. Since we already maxed out the social security tax with the salary from the C-corp, do we still need to pay self employment tax if we go with S-corp?


  • johnqhjohnqh subscriber Posts: 4
    There is a cap on the social security tax. Self employment tax is essentially social security tax x 2 (both the business portion and employee portion).
    LLC doesn`t give any tax benefits - just think, you can easily pay yourself all the profits as salary, and the end result on tax will be no different between a corp and LLC. On the other hand, Corp is much easier to deal with when you need additional investors or when you sell the business.
  • smallbizcoachsmallbizcoach subscriber Posts: 0
    John -
    There are two people that I think you need to spend some time and money on.
    Your accountant.
    Your lawyer.
    Personally, I wouldn`t have your business to do anything with the other business. What if one fails? What if you and partners succeeds okay, but your personal one skyrockets? Will he want a piece of the pie too?
    Just some thoughts. You need more help than this forum will provide you.
    Best of luck and you will be successful.
  • PiperTaxPiperTax subscriber Posts: 5
    S-Corps profits, as a rule, are not subject to SE Tax. That said, before you can take any payouts of profits, you`ll be required to pay yourselves a "reasonable salary." (See link in my signature for a slightly more in-depth explanation.)PiperTax2007-11-23 12:39:50
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