I am looking to open up an online marketing service business. I am trying to decide which LLC taxation should I choose (Sole, S-Corp, C-Corp). Some quick things to know:
- I am the only owner so it's a single member LLC
- I am 16, so if I open the LLC this will be my first tax return form
- I am expecting to not reach $100,000 in yearly sales for a few years
- LLC will be registered under state of California
I understand that with the sole proprietorship path I will file a regular tax return and attach to it a schedule c for my LLC taxes. I want to know how much percentage will I be taxed for employment taxes (since I will be paying myself a salary)? How much would the company be taxed at the end of the year if I have a profit? Also, if I choose sole proprietorship taxation will I still have personal protection if my business's taxes get screwed up and the IRS comes after my business. Also, what I file bankruptcy, will my personal assets be protected? What is the benefits for me to file to be taxed as a sole proprietorship? What are the cons?
I am confused as to how an s-corp's taxation process works. Let's say that annually my income was $120,000 and my expenses were $20,000. So my gross profit was $100,000. Now I pay myself a $50,000 annual salary. The LLC now has $50,000 left as profit. Ok, now my questions are, what is the percentage on the self employment tax and how much do I have to pay? What is the taxes amount that I have to pay for the profit left over and what is the percentage? What is the benefits for me to file to be taxed as an s-corp? What are the cons?
C-Corp I'm not really considering as an option due to it's double taxation issue.
I know that it is always a good idea to hire a CPA/attorney to help with these things, but I don't have the funds for that at this moment.
Also, based on your experience/opinion what is the best way for me to choose to be taxed in my position and age?