S-corp questions - Posted by Jeremy
Posted by Jeremy on August 23, 2003 at 19:17:04:
After meeting with the CPA that my partner has used for years, she told me how much better a C-corp is than an S (We are an LLC, but trying to figure out how to be taxed)…even for exclusively flipping properties.
Basically, she said that the IRS is going to want FICA/Social Security taxes on ALL income/profits regardless of your filing as an S-corp and claiming a “reasonable salary.” Has anyone else found this to be the case or do you think this CPA is too conservative? Almost every article I’ve read – not just on this site – seems to say that’s the big benefit of the S-corp…that your dividends don’t get the self-employment tax.
Also, about the “reasonable salary.” They say to look for the industry standards in the field to compare salaries. Since that’s more difficult in RE investing, does anyone else use any guidelines? Would 50% of profits as a salary be enough to satisfy the IRS. I understand that I wouldn’t be receiving legal advice, but just some help from those that have been through it would be appreciated.