Multiple businesses, which entity?

johnqh

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?

johnqh

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.

smallbizcoach

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.
Aaron

PiperTax

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