LLC S Corp tax

[shahzadb]

VA

I have a single-member LLC. I read online that I can treat this as S Corp for tax savings

if I have $100K income, salary of $50k, what happens to remaining $50k, does it stay with business as Retained Earnings?

 

[zddoodah]

Retain the services of a business tax preparer.

 

[davew9128]

That's an accounting question not a tax law question.

 

[Taxing Matters]

I have a single-member LLC. I read online that I can treat this as S Corp for tax savings

if I have $100K income, salary of $50k, what happens to remaining $50k, does it stay with business as Retained Earnings?

Converting to an S-corporation is not likely to save you on income tax. That's because, like the LLC, all the income of the corporation ends up flowing to your individual income tax return. What it might do is save you some FICA (Social Security and Medicare) taxes. That would depend on factors like what kind of business this is, what you do for the business, and what reasonable compensation would be for you. I suggest you sit down with a tax professional familiar with business taxation and go through the details of your particular business to see what form of business will work best for you.

As to whether to keep the profit in the business or distribute out to yourself, that's a business decision you make based on your needs and the needs of the business.

 

[LdiJ]

VA

I have a single-member LLC. I read online that I can treat this as S Corp for tax savings

if I have $100K income, salary of $50k, what happens to remaining $50k, does it stay with business as Retained Earnings?

You have to make an S-corp election to be treated as an S-Corp. That means filling out Form 2553 and sending it to the IRS. There are deadlines to do this. Read the instructions for Form 2553.

Any profit of the S-Corp gets passed through to your personal return via a Schedule K-1. You don't necessarily save any regular tax but as long as you are paying yourself a fair market wage, it can save you some money on self employment taxes.