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Old 07-12-2018, 03:55 PM   #1
miket
Pope & Young
 
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Join Date: Oct 2008
Location: Plantersville
Hunt In: Grimes County, Victoria
Default Small business: Corporate tax vs self employment tax

Been looking into changing from SP to LLC. One factor is an attempt to avoid the self employment tax. It is about 15%. As of now all profit is income so self employment tax applies. But if I go LLC and file form 8832 my personal income will not be self employment taxed but company profits will be taxed at corporate tax rate of 21%. So my question is, where is the benefit? Is it better to pay self employment tax on all of it? Only way I can see it working out in favor of filing 8832 is if I pay myself all the profits anyway? I guess?

Maybe its better to not file 8832 and stay as disregarded entity and "only" pay 15%?
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