Unless you actually make a decent salary. When your a sole proprietor you have to pay the self employment tax. Self employment tax is matching social security payments. You pay both the individual ss tax and as well as the employers contribution which comes to about double.
If you were incorporated and you were an employee, which you would be, you could collect half your pay in salary and the other half in dividends, or 1/4 in salary and 3/4 in dividends (which yields a deeper tax break) Dividends are not subject to the 2nd half of the contributing tax or the self employment tax, never mind workers comp, state unemployment, etc. For those that rant and rave against the big bad government and their unreasonable taxes (count me in), then it's foolish to voluntarily pay what is not required of you. But to all those that do go ahead and pay the extra not required ss tax, My family and all the rest of those who will someday collect ss in our golden years thank you for being so generous as paying this extra voluntary tax to help insure the solvency of ss so it will be there when we retire as well as give the government even more money to borrow against so they can spend even more tax dollars that really aren't there. Also, if you have a good cpa, they tell you this stuff when they do your income taxes. a cpa is not a tax preparer or a book keeper. RickG wrote: > Makes sense to me...thanks! -RickG > > On Tue, Jun 2, 2009 at 11:32 PM, Marlon K. Schafer <[email protected]> > wrote: >> Let me get my accountant wife to answer that one. Here's Melissa.... >> >> Well, for us it's not yet in our best interest to incorporate. Sometimes >> the reason for incorporating is to help insulate the individual from a >> lawsuit - but usually if the corp is sued, they also sue the owner of the >> corp. I agree with you about the S-Corp - the income from an S-Corp is >> picked up on your personal return so there aren't usually as many advantages >> when doing tax planning. We have not incorporated because the cost of being >> a corp (accounting, legal, another set of books, more time on Melissa's part >> to work on the books...) is greater to us right now than the benefits. I >> see it as something that we will probably need to do in the future as our >> income increases and we need to do more tax planning. Hope that helps..... >> Melissa >> >> There ya have it! >> marlon >> >> ----- Original Message ----- >> From: "RickG" <[email protected]> >> To: "WISPA General List" <[email protected]> >> Sent: Monday, May 25, 2009 12:02 PM >> Subject: [WISPA] Legal Entity - which type? Was: Quesiton on Funding >> /Financing / Capital Availability >> >> >> Ha! Another interesting topic! In the past, when doing business for >> myself, I legally filed as a sole-proprietor. When I got into the WISP >> business, for a multitude of reasons, I became an "S-Corp". After >> filing my taxes, it seems to be much simpler and possibly more >> advantageous to just be a sole-proprietor. But that goes against all >> advise I receive. >> Marlon, I'm actually surprised that you are a sole-proprietor. What >> benefits have you found by remaining so? >> -RickG >> >> On Mon, May 25, 2009 at 11:54 AM, Marlon K. Schafer >> <[email protected]> wrote: >>> One more thing. I don't agree with your definitions per se'. >>> >>> We all have businesses. A proprietorship is a TYPE of business. We are a >>> proprietorship because I'm not incorporated (incorporating is over rated >>> and >>> expensive to do right). I'm still a business though.... >>> >>> http://en.wikipedia.org/wiki/Business >>> >>> http://en.wikipedia.org/wiki/Sole_proprietorship >>> >>> http://en.wikipedia.org/wiki/Asset >>> >>> marlon >>> >>> ----- Original Message ----- >>> From: "Charles Wu" <[email protected]> >>> To: "WISPA General List" <[email protected]> >>> Sent: Sunday, May 24, 2009 10:03 PM >>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >>> Availability >>> >>> >>>> Hi Marlon, >>>> >>>> I think it's appropriate to make a few definitions and distinctions on >>>> things so everyone is on the same page >>>> >>>> Specifically, for purposes of making my point, I define >>>> >>>> Proprietorship: A commercial activity engaged in as a means of livelihood >>>> or profit >>>> >>>> Business: A unique system of processes and procedures that documents and >>>> codifies a specific method of proprietorship >>>> >>>> Asset: cash, inventory, equipment, infrastructure, customer contracts, >>>> brand, marketing, etc >>>> >>>>> Grin. Sure it is. That's what a LOT of small business people do. It's >>>>> also kind of common for doctors, dentists, plumbers etc.... Sometimes it >>>>> sucks, >>>> Now, everything you stated above is just a method of proprietorship, and >>>> in most cases, from a sale perspective, a proprietorships isn't worth >>>> anything more than the depreciated value of its assets >>>> >>>> Say you were buying out the local plumber's office -- what would he have >>>> of value? His truck? Some old tools? A customer list / brand perhaps >>>> (but the reality of things is that customers do business with him because >>>> of him, and if you bought him out and he moved out of town, those >>>> customers would probably go back to being on the open market) >>>> >>>> Now, in comparing the WISP 'proprietorship' vs. the plumber, it's worth >>>> noting that the WISP is somewhat unique in that it results in the >>>> creation >>>> of an independent asset that holds onto a lot of value (e.g., the >>>> recurring revenue and everything that goes to support it); in many ways, >>>> this is akin to real-estate >>>> >>>>> Not >>>>> everyone out there even wants to get that big (if I had a nickle for >>>>> every >>>>> business owner that's told me the most fun they had and the most money >>>>> they >>>>> made was when it was just them, no employees......) But then again, >>>>> that's >>>>> one of the really cool things about this buisness, it's big enough and >>>>> flexible enough to allow many different business models and operator >>>>> dreams >>>>> to bear fuit! >>>> True...and you have the added benefit of building an asset that has value >>>> (be happy we're not plumbers =) >>>> >>>> -Charles >>>> >>>> >>>> >>>> >>>> >>>> -------------------------------------------------------------------------------- >>>> WISPA Wants You! Join today! >>>> http://signup.wispa.org/ >>>> -------------------------------------------------------------------------------- >>>> >>>> WISPA Wireless List: [email protected] >>>> >>>> Subscribe/Unsubscribe: >>>> http://lists.wispa.org/mailman/listinfo/wireless >>>> >>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>> >>> >>> -------------------------------------------------------------------------------- >>> WISPA Wants You! 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