WE'VE MOVED!

We are proud to announce our NEW community destination. Engage with resident experts and fellow entrepreneurs, and learn everything you need to start your business. Check out the new home of StartupNation Community at startupnation.mn.co
Options

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?
· Share on FacebookShare on Twitter Share on Google+

Comments

  • Options
    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.
    · Share on FacebookShare on Twitter Share on Google+
  • Options
    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.
    Aaron
    · Share on FacebookShare on Twitter Share on Google+
  • Options
    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
    · Share on FacebookShare on Twitter Share on Google+
Sign In or Register to comment.