We get this question a lot. According to Veronica Santee of Wayne Bradford CPA, the typical sole proprietor crossing the $20,000 to $25,000 profit threshhold will be saving enough on their taxes to offset the "overhead" expenses of a corporate tax return and quarterly payroll forms. Veronica stressed, like we do, that each case is individual.As a reminder, LLCs can be taxed multiple ways. One of the most popular options is to be taxed as a Sub Chapter-S corporation. This allows you to draw a reasonable salary from your business, save on self employment tax and take the remaining profit as a distribution. Drawing a reasonable salary requires some kind of payroll. The payroll aspect turns away some people who might really benefit from doing business as an LLC or PLLC.
"Quarterly payroll" isn't nearly as scary or cumbersome as it sounds. Once you're set up with a good CPA, there are three, count them, three payroll forms that need to be sent in to the IRS and State on a quarterly basis. Wayne Bradford's office will generate the forms and mail them to you automatically for about $50 per quarter if you retain his services.
I don't know about you, but $50 extra out of my pocket per quarter plus the cost of a few stamps to mail forms to the IRS and State seems like a small price to pay to potentially save thousands on my taxes at the end of the year.
Again, the above information is not to be construed as tax advice. However, any one can tell you that it is just sound business planning to have a good CPA in your corner who can help you reduce your tax burden to its lowest. After all, the money stays in your pocket instead of going to the government!
For more information on tax planning and strategies, however, please contact Wayne Bradford CPA at 480-317-9588. If you want help to set up an Arizona LLC or PLLC, please consider using Reliable LLC Filings, LLC.
