andy_p1
02-13-2013, 11:15 AM
Hello everyone!
I was wondering if someone could give me some pointers regarding the following situation that I am into:
I have a very small online business that generates about 25K income per Year . As of now I just declare that as my hobby income. However, I want to quite my day job and focus on my business full time.
I can sustain myself and family for an year or so on 25K but I not on less than that (My monthly expenses are about 2K+).
So now my question is this: How should I structure my business so that I can keep as close to 24K as possible after tax?
From what I understand I have two options:
OPTION 1. Form a C-Corporation: If I register a C corp, I can probably show half of may house rent and car payment as expense. Adding a few more expenses, I am still left with about 15K. Now, if I decide to pay the remaining to myself as Salary (and show no profit for the Corp) , the corp will have have to pay payroll tax of 11%. And I have to pay income tax on whatever I get as salary.
OPTION 2: Form an S Corp or LLC or Independent Contractor: In these cases, I have to pay Self Employment tax as well as Income tax.
So in both the options, I am left with less than what I need to sustain myself. I am not sure what to do. I am not averse to paying taxes but if I am not able to sustain myself then I can't focus on the business to make it grow.
Please help.
thank you,
Andy.
I was wondering if someone could give me some pointers regarding the following situation that I am into:
I have a very small online business that generates about 25K income per Year . As of now I just declare that as my hobby income. However, I want to quite my day job and focus on my business full time.
I can sustain myself and family for an year or so on 25K but I not on less than that (My monthly expenses are about 2K+).
So now my question is this: How should I structure my business so that I can keep as close to 24K as possible after tax?
From what I understand I have two options:
OPTION 1. Form a C-Corporation: If I register a C corp, I can probably show half of may house rent and car payment as expense. Adding a few more expenses, I am still left with about 15K. Now, if I decide to pay the remaining to myself as Salary (and show no profit for the Corp) , the corp will have have to pay payroll tax of 11%. And I have to pay income tax on whatever I get as salary.
OPTION 2: Form an S Corp or LLC or Independent Contractor: In these cases, I have to pay Self Employment tax as well as Income tax.
So in both the options, I am left with less than what I need to sustain myself. I am not sure what to do. I am not averse to paying taxes but if I am not able to sustain myself then I can't focus on the business to make it grow.
Please help.
thank you,
Andy.