06-16-2015, 11:49 PM
(This post was last modified: 06-16-2015, 11:56 PM by Dividend Watcher.)
In my opinion, I would march right over to an Enrolled Agent or CPA's office and discuss this.
S-Corps are treated as non-taxable corporations with all profits/losses a passed through to the shareholder(s). So you have to pay yourself a salary and excess profits can be distributed as shareholder distributions on a K-1. If the IRS doesn't agree that the salary you pay yourself is reasonable for the work you do, then they can reclassify distributions as income subject to FICA & unemployement taxes in addition to the usual stuff.
I don't know what the status would be of sheltering your personal stock investments in an S-Corp. but I assume it would be the same as if you held them in a personal taxable account. If the main line of business of the S-Corp is investments, then I think you would fall under much more onerous regulation and reporting requirements to the SEC.
I can see the benefits of an S-Corp (or LLC) for the freelance production business just as a liability shield but to act as a tax dodge you're creeping into shaky ground. Pay for good professional advice.
P.S. Neither H&R Block nor Jackson-Hewitt is a good place to start searching for help on this.
P.S.S. Welcome to the forum! I was gonna invite you to introduce yourself in the Introductions section but I guess people could wander over to your blog and check out the advertising while they're at it.
S-Corps are treated as non-taxable corporations with all profits/losses a passed through to the shareholder(s). So you have to pay yourself a salary and excess profits can be distributed as shareholder distributions on a K-1. If the IRS doesn't agree that the salary you pay yourself is reasonable for the work you do, then they can reclassify distributions as income subject to FICA & unemployement taxes in addition to the usual stuff.
I don't know what the status would be of sheltering your personal stock investments in an S-Corp. but I assume it would be the same as if you held them in a personal taxable account. If the main line of business of the S-Corp is investments, then I think you would fall under much more onerous regulation and reporting requirements to the SEC.
I can see the benefits of an S-Corp (or LLC) for the freelance production business just as a liability shield but to act as a tax dodge you're creeping into shaky ground. Pay for good professional advice.
P.S. Neither H&R Block nor Jackson-Hewitt is a good place to start searching for help on this.
P.S.S. Welcome to the forum! I was gonna invite you to introduce yourself in the Introductions section but I guess people could wander over to your blog and check out the advertising while they're at it.