Quote:
Originally Posted by jdw3018
With an S-Corp you have to pay yourself a salary, and the taxes on that is no different than the taxes for a sole proprietorship (I mean, they're different, but they add up to the same amount in bottom line terms to you).
However, with an S-Corp you don't have to take your entire income as salary, and any income taken at the end of the year beyond that salary is treated as a dividend and taxed as such. That's where the savings come in.
In my opinion, to take advantage of the S-Corp (which includes additional fees and is a more complicated filing process) you have to have a decent amount of income. But it definitely pays to consult your accountant.
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But, dividends are taxed at the same rate as earned income, I think.