Taxes



SitPoMk said:
I didn't register an LLC or an s-corp so I basically gave my SSN whenever I submitted my W9.
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You can get a EIN (tax ID #) even if your a sole proprietor. Its way easy, you can do it online and have your ID# instantly.
Maybe I'm just paranoid but I hate giving out my ssn.
 
mont7071 said:
Megatabbers is correct, a Sub-S structure allows you avoid some of the taxes based on characterization of some income as "wages" (like a normal W-2 employee) and the bulk of it as owner "dividends" (actually called S-distributions). It doesn't make any difference at lower level of incomes, but the savings at higher income (100k+) can be pretty substantial, because you only pay the self-employment tax on a portion of your income. As long as you pay on the salary side an amount that is "reasonable" (interestingly, IRS regs never actually give a brightline rule on what "reasonable" is) then you can shift the bulk of your income to the tax-advantaged S-distribution side.
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This. And as mentioned further down in the thread unless you're banking mid-six digits plus and issue yourself a fat dividend each quarter and have 'an acceptable level of income' for some your in your position in the IRS eyes, the savings between Sole Proprietorship/LLC/and Corp are negligible.

Even as a sole proprietor you can deduct your expenses (click costs) from whatever revenue you're bringing in. Business trips, meals, product samples are deductible as well.
-E
 
bizkiller said:
lol. I was asking, if i was still required to pay tax ? and.. how would IRS know about the income when I didn't submit my w9?
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Ppl underreport their income all the time and the vast majority of them probably don't get caught. The thing is if/when you DO get caught you're going to owe interest, penalties, and interest on the penalties that will have you wishing that you just paid whatever was due at the time... The IRS can look back years if they really want to fvck with you down the line... Just ask Wesley Snipes
 
from the way I was told by my CPA and estate planning attorney...

1. 12.4% of the self employement tax ( total is 15.3% ) is payable up to 106k~ of your income. If you made more then 106k, then anything after does not get taxed the 12.4%

2. 2.9% of the self employement tax is medicare and is taxable on all income, regardless of amount.

Then of course you have state taxes unless you live in a tax free state, and then you have reg federal withholding based on your tax bracket class. You also get to claim half your self employment for a tax deduction also from gross income.

If you make upto or right at 106k, then you got taxed pretty heavily depending on your filing status. However, if you made a lot more, the self employement tax is not all that much to be honest.

My advice would be, make sure you make a hella lot more then 106k in the tax year.
 
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