Quote:
Originally posted by MetaformX
So if you form an LLC, you don't pay double the SS tax? Instead you just pay 7.5%?
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What PK said is pretty close to how I'm set up.
I take about half of my money as a salary. So I have to pay payroll (read social security) taxes on that. (15.3% total)
The other half of the money I take in the form of a dividend, which I still have to pay federal and state income tax on, but its exempt from social security tax.
The only disadvantage to this is that there will be less social security money due you at age 65 or 72 or whatever age you retire at, but if you're smart with your money that shouldn't be an issue.
So yeah, by taking only half my money as salary, I only pay social security on half, so that works out about the same as only having to pay the 7.5% you'd pay working for someone else.