$160,417.26

[mudcub]

I just did my taxes today. I paid $160,417.26 to the US government in 2006. In addition, I paid $8,586.88 in miscellaneous Colorado state taxes. That's enough to turn someone republican!

Comments

[bullneck.livejournal.com]

Jeebus, $160k in taxes alone? What kind of figures are you pulling down net?

[mudcub.livejournal.com]

I'm cheating a little - my family owns an "S Corp"... so the company makes the profit, and I pay the federal taxes for it. So 99% of that tax bill is only on paper and I don't get to see any of it. Still, it's a stunning number to me and absolutely unthinkable.

[bigjohnsf.livejournal.com]

If you are managing your taxes properly, there is a lot of profit on the other side of that tax bill.

Out of context that number is virtually meaningless. But, remember that we have the lowest rate of taxation in the First World, by a third, at least.

[that-dang-otter.livejournal.com]

Out of curiosity, if you were starting a small catering business with 2-3 owners and no regular employees, would you form an LLC or an S-corp? I'm trying to make that decision right now.

[mudcub.livejournal.com]

In my uninformed opinion, I'd say the LLC. We only set up an S-Corp for the tax benefits, and those kind of evaporated with the law changes in 2000-2002.

[allanh.livejournal.com]

The S-corp still has the benefit of single taxation over a C-corp, where everything is taxed twice (once for the corporation, and again when the owner withdraws salary or profits). LLPs, LLCs, etcetera, each have different sets of advantages for different circumstances.

Your CPA should be able to tell you which is going to work best for your business.

You do have a CPA on tap, yes? If not, I highly recommend doing so. My CPA saved me from making some wickedly stupid mistakes my first three or four years in business.

[that-dang-otter.livejournal.com]

I talked to a guy in Ukiah who didn't seem to know anything at all about LLCs. We just had an initial chat, nothing was actually done. He seems quite able to set up an S-corp, but I understand that LLCs are simpler and I happen to have the Nolo LLC kit handy.

[allanh.livejournal.com]

I started Spectrum SupportNet, Inc. using a great lawyer and a regular accountant. Within a month, I realized I needed a CPA to keep me out of trouble.

It's a pain in the ass (at best) to change corporation types once you've incorporated. You may also want to incorporate in a state OTHER than California, for tax and/or liability purposes. (For example, will your liability insurance be cheaper if you're incorporated in Delaware, Nevada, or Texas?)

Given the variables, I suggest it's worth considering spending the money to consult either a CPA or a tax lawyer to ensure that you're setting up the best form of corporation for your company's desired outcome. :)