I need some help with my Corporation?

Question

Okay, I own a small business. I have one client, and I am the only employee. I get paid once a month. I have my payroll set up through BofA.

i don't really know, but this is what I have been doing.

When I get paid. I then pay myself an amount that leave just enough in the business account to cover the taxes. Which are a lot. I don't really like this.

Someone was telling me that I should pay myself very little, just enough for pocket money. And then pay for everything else through the corporation (I assume through a business credit card?)

I was just wondering if this is sound advice? It sounds like it because I would then pay less in taxes, but I don't know for sure.

Any advice or help? Please. Thank you.

Answer 1

Your pay is determined at the board meeting.

What is it that you do not like? Corporate TAXES?

If you are the only person in the corporation, you should have made it an S-Corp, which does not pay Federal Income Taxes.

You should leave enough in the corporate account for business growth. Businesses are not static, they will either shrink or grow. If you don't make it grow, it will shrink.

If you are talking about your payroll taxes, forget it, everyone who receives a salary pays those. If you only receive dividends as a shareholder, you would pay the low taxes on dividends though.

Since you are receiving a salary as an employee, you can set up a Retirement Account, such as an SEP IRA or 401K with company matching, and dump tax defered money and profits into that. Check with a company that manages such things like Scottrade.

You can also set up a corporate medical and dental plan, paid for by the corporation.

Your corporation can buy or lease cars, which you can drive as part of your business. Or buildings, and offices and houses. Leases are better in my state because the state taxes corporate assets.

In other words, as always, the more complex paperwork, the less taxes you pay.

The big benefit to incorporating, is that if the corporation gets sued, they can't touch your assets as the shareholder. But you really need to do everything RIGHT to maintain that veil of protection.

Answer 2

what if you sees someone that can invest more on your business will that be ok for you? well i know global solution agency are looking for someone to introduce to there client for investment,so just contact them and invest more on your business([e-mail])...

Answer 3

You don't say if you sell a service or a product. If you sell a product, you would want to pay for the cost of the items you sell with a corporate checking account, not with personal checking. Any expense that is associated with your business would be paid with corporate checking, utilities, legal expense, advertising, shipping, etc. As far as saving money on taxes, if you have an LLC or a S corporation, the profit flows directly to you anyways, so there is no savings of tax. The corporation can pay for any and all expense associated with producing income, and can deduct these expenses from income to arrive at profit that you pay tax on. But it makes no difference if you get "pocket money" or all the profit, you pay tax on the net profit of the corp at the end of the tax year. If you have a C corp the corporation pays tax on it's profit, then you pay tax on what you are paid, so the more the corp pays you, the more tax you pay. The less you are paid by a C corp, the more the C corp makes so the more tax it pays.  6 of one,, half dozen of the other