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Would I owe more on taxes each year as a franchise business owner as an S Corp?
I will be meeting with a CPA in the next couple weeks for professional advise but I want to see what the opinion of other may be on this topic.
I am in the process of becoming a franchise owner of an industrial supply company. I have been in this business for over 10 years and have a book of business to bring a long with me.
I will not have a store front, I will not hold inventory. Products will ship direct from the wearhouse that the company I will be franchising with provides.
My pay checks will only reflect what I made in comission. I am projecting my first year I will make around 60K to 75k.
Is set up as an S Corp would I owe back thousands in taxes once tax season comes around? Or would it be similar to what I would expect as someone making that much working for a large corporation (usually get back some state and federal)
I am single with no dependents.
2 Answers
- StephenWeinsteinLv 74 years ago
You will owe a lot, not only for tax, but also for the penalty for breaking the law by waiting until tax season. You are required to pay estimated tax during the year, and you are not allowed to wait for tax season.
- NALv 74 years ago
As your income is entirely from commissions with no capital investment, you reasonable salary is equal to the commissions received.
Having an S corp would increase your costs, leaving less for you.
If your CPA says otherwise, ask him how much he charges for the 1120s form, preparing payroll, filing 940s and audit fees.