Tax structure for owner-S corp, LLC Or?

A sole proprietor LLC served me just fine. Many here will remind you it does not really protect you...but it got the job done just fine for me.

I never assumed I would be protected NO MATTER WHAT if I really screwed up and drove drunk and killed people or any other similar scenario.

 

Filing the LLC as an S Corp makes sense if you net around 70k taxable income IIRC. What it does is save you the self employment tax on everything you take as a distribution above a reasonable salary. The downside of it is that it costs an extra 2 grand a year or so in CPA fees because now you have to file a corporate tax return.

Eg. 70k taxable income with S Corp filing
40k reasonable salary subject to self employment tax

30k distribution not subject to 15% SE tax
.15 * 30,000 = $4,500 of annual savings

which is above and beyond the extra 2k a year it costs in CPA fees and therefore worth it. The more taxable income you make the better a deal it becomes. If you netted 140k for example it would save you 15k annually less the 2k cpa costs so 13k of tax savings total.

The downside of this strategy is lowered social security benefits so make sure your funding a healthy retirement account.

 

LLC taxed as S corp here.

 

Best answer - we do exactly the same, as net is always above the $70k mark.

Figure your net the best you can and proceed accordingly.

And yes, we pay $1500-$2000 for a CPA to settle end of year. It's above our pay grade, and includes full audit coverage - i.e. - they take the trip to Jefferson City,MO to present if the need arises.

 

A little rich, but not out of the realm. Depends what he offers.

My good bride does the quarterlies , Fed/State - unemployment (sigh) - SS etc - monthly filings.

I take care of basic receipt accounting - Profit Guages is what I use - $19/month.

CPA does all the end of year and audit responsibility.

We're in MO.

We may not be like all folks - but the taxes are sorted on the dot, and filed ASAP first of year. Tax savings account of 15% so that if there's a bill, it's paid immediately. There's $20k in that account right now just in case. Anything left gets rolled over to pay for the next years retirement accounts payments - not a downpayment on a yacht.

We like things black and white, on time, so the IRS is the least of our worries.

 

Contact an accountant, he will tell you what is best.

 

Like @bad-luck said -

But find a CPA in your area that knows trucking. I mean - first question "Do you have truckers on your books?"

I like to have one close enough I can go punch in the face for less than a tank of gas - not someone 7 states over.

There's a huge discussion to take place that depends solely on your circumstance and future plans, the pros and cons, and that's best held with a CPA that knows their sheets on the bed.

The best spent $ is in advance, for good advice. Not what cousin Zach told you at Applebees. Trucking is so diverse and individuals are in such an array of circumstance, that it is never a "one size fits all " answer.