Ive read a lot, and been confused even more! I am deciding if incorporating my duct cleaning business is nescessary (currently a sole proprietor).
My first thought would be an LLC, as filings are less expensive and less extensive.
However, I see an opporunity for significant tax savings with an S Corp. As I understand it, I could pay myself a 'reasonable' salary based on the number of hours I work (which is normally 15-20 hrs/week). then, the rest of the income can be passed through to me as a distribution. This distribution, to the best of my knowledge, must be reported as income, however it is not subject to the 15.3 % soc security and medicare tax?
I foresee an annual income of approx 50k next year and wonder if it will be advantageous to go with an s-corp. OR, are the filings too labor intensive, which will call for an atty and even more $$