Is C-Corp the best option?

thomorthomor subscriber Posts: 6
edited February 2007 in Business Planning
Its going to be a web based business, and will eventually turn a profit. I talked to a CPA and he told me that C-Corp is the best option, since you can save a lot of money on taxes. Does everyone else agree on that assessment? Here are the numbers he did as an example:S-Corp All income pass-through to you personally. For 2006, for $50,000 self-employed income, you are paying: Income Tax: 6,945 Self-Employment Tax: 7,065 (extra 14.13% on $50,000) Total tax: $14,010 (Ouch)=============================================C-corp: You transfer $16,000 to yourself as "rent". So on personal level: Income $16,000 Standard Deduction: (5150) Exemption: (3300)
Taxable income: $7550 Tax 10%: $755 (notice rent has no self-employment tax) On Corporate level: Profit $50,000 Rent: (16,000)
Adjusted profit: 34,000 Tax at 15%: $5,100 Total tax = $5,855
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