Llc

Quote from traderstatus:

The tax law on LLCs is flexible. Generally anything REASONABLE goes. If you are actively involved, full-time, doing the day-to-day operations of the Medical Staffing business then, IMO, reasonable might mean most or all of your income should be subject to self-employment taxation.

On the other hand, if your earnings come to you based more on the capital invested, rather than your personal services rendered, then the LLC might allow you to avoid some or all of those self-employment taxes..

Not so with a sole-proprietorship. A sole-proprietorship would result in 100% being taxable no matter if it was a result of services or capital...
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I think it depends on the state that your LLC is registered. Usually as a manager of a LLC (unless it is managed by others), the owner has to pay SS tax (at least it is the case in MA).
 
Quote from yip1997:I think it depends on the state that your LLC is registered. Usually as a manager of a LLC (unless it is managed by yourself), the owner has to pay SS tax (at least it is the case in MA).
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IRS law is not really based on State law in this regard.

A manager-managed LLC, assuming you chose to set it up that way, would likely, by definition, attribute income to the manager for management services, and hence that likely would be self-employment income, assuming the manager was a human being (not an entity).

But this is getting a little too specific and complex for a general information bulletin board like EliteTrader...
 
Quote from NasdaqTrader:

What if it's an S or C corp, would I have to pay 15.3% in social security taxes on my income?
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S-corps allow reasonable "non-dividend" non-taxable distributions to shareholders for the return on capital invested, IMO.

C-corps allow "dividend" 15% taxable distributions to shareholders for the return on capital invested.
 
Quote from traderstatus:

S-corps allow reasonable "non-dividend" non-taxable distributions to shareholders for the return on capital invested, IMO.

C-corps allow "dividend" 15% taxable distributions to shareholders for the return on capital invested.
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I'm still not sure what the answer is.
 
Quote from NasdaqTrader:

I'm still not sure what the answer is.
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Sorry, somehow part of my typed reply got deleted:

Ques. Are self-employment taxes due on income earned by an s-corp or a c-corp?

Ans. Generally yes to some extent, but not necessarily on all of the income. The following are not subject to self-employment tax:

S-corps allow reasonable "non-dividend" non-taxable distributions to shareholders for the return on capital invested, IMO.

C-corps allow "dividend" 15% taxable distributions to shareholders for the return on capital invested.
 
Quote from Vinny1:

Is it generally not a problem with states/towns with zoning issues to have a business from home?
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Vinny, if this was directed to my earlier reply... For IRS self-employment and for IRS income tax purposes it generally makes little difference as to local zoning etc.

Local zoning may certainly have a bearing on any applicable State and Local taxes or fees assessed.

Technically most localities "require" all trades or businesses to register at town hall/city hall and pay some token fee for the privilege of doing business in town.

Some localities, particularly those in CA, assess an annual privilege tax on businesses.
 
Yes I do since I am not doing business in my state (not selling a product or service). Trading for yourself is not the same as opening a home-based business.
 
Quote from optioncoach:

Yes I do since I am not doing business in my state (not selling a product or service). Trading for yourself is not the same as opening a home-based business.
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I guess you could get away with it because it would be hard to track. But if your home state catches you they will come after you for taxes and penalties most likely. Where you trade is where you conduct business, since that's where your business is located, unless you can demonstrate you trade the majority of time in another state. I just decided to take the safe route for now in inc. in my home state. CO taxes are 4.7%, so it's not exorbitant.
 
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