Page Title

6) Is there any way to avoid self employment taxes?

Answer:

Yes, if you are a shareholder (owner) of a corporation, you will only pay

self employment tax on money you receive from the corporation for

services to the corporation. You do not pay self employment taxes

on dividends.

7) How about Franchise Tax. Is there a way to avoid paying Franchise Tax?

Answer:

Yes. Partnerships and Sole Proprietorships do not pay franchise tax.

8) What is a Subchapter S Corporation?

Answer:

A Subchapter S Corporation is a designation allowed by the IRS that must

be claimed by the corporation. By designating a corporation as a Sub

chapter S Corp, income earned by the corporation is taxed as if the

entity was a partnership. The corporation itself is not taxed. To be

eligible, there must be no more than 75 shareholders, must include only

eligible shareholders, must have only one class of stock, and must be a

domestic corporation.

9) If I form a corporation or limited liability company will I be shielded from personal

liability?

Answer:

No, unless you follow the rules. Never commingle personal assets

with company assets. Keep minutes of all board of directors meetings

and pass resolutions to keep your corporate books up to date. Each type

of entity has it's own formalities that must be followed. These range

from very simple for sole proprietor to very complex for

corporations and limited partnerships.

10) I'm not sure about how to keep the records or what type of entity to start. Can an attorney help me?

Answer:

Yes, an attorney will help you set up your entity and assist you in

establishing procedures to keep the entity functioning as you want.

A good CPA is also an integral part of the process, and your attorney

should work closely with your CPA to assure the tax issues are

handled advantageously.