"Matthew Speed" <mspeed[at]mspeed.net> wrote

- quote -

You don't declare distributions as wages. You declare wages
as wages.

Some of - in fact, most of - what you take from the "S"
corporation should be in the form of wages.

Other distributions can be in the form of profit
distributions.

- quote -

Nope, in fact they can't.

Your profits from an LLC and/or partnership are taxed for
regular income tax, as well as self-employment taxes (Social
Security and Medicare), and that's all on your dime.

- quote -

Not really.

The two of you need to seek legal as well as tax advice on
these topics.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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Once upon a time a friend and I formed a sub S corporation
for software development. The thinking behind the sub S was
liability protection with minimal taxes. Unfortunately,
choosing to do my taxes myself rather than use a CPA got me
in trouble because I didn't declare distributions as wages.
The corporation was dissolved and all tax issues addressed.
My partner called today and told me that someone he met is
interested in purchasing a license for a software package I
wrote (30K+, depending on options and customization) so we
may need to form a new company to start marketing and
supporting this. I still need liability protection but would
like to minimize taxes. Does a partnership or LLC have to
match SS withholding? Is there any way to do this so that
the extent of the taxes we'll pay will be the same as if we
were each W-2'ed for half the net income?

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >