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I've been reviewing document after document of the differences and benefits of each type of Corporation. I even contacted two Internet marketing gurus and to my surprise both replied. I first contacted Jeremy from www.Shoemoney.com with an email asking why he uses and S-Corp. His reply was much appreciated but it didn't shed a ton of light.
well our lawyers set all that up... I don't really understand it that much... I know s-class passes through to your personal income tax rate but we own some LLC stuff like auctionads was/is a LLC
this are our current companies.
< list removed... I dont want to list them just in case he didn't want them to be published >
So then I contacted Paul from www.UberAffiliate.com. Paul had some helpful advice and gave me some great links to websites such as Incnow.com which is the service I plan to use.
While I have not yet come to my FINAL conclusions, perhaps you can help me make my final decision.
So what should I choose to minimize my taxes while protecting my assets? There are three choices that I have looked over.
1. C-Corp
2. S-Corp
3. LLC
First, the C-Corp is out. It's just not for me. Next.
By far the LLC is the easiest business model to pick from. You can pick how you want to be taxed (as a corporation or as an individual) and all income is passed through to you. This means that if I made $80,000 a month profit, I'd be paying taxes on all $80,000. Ouch. The nice thing about the LLC is that it's rather informal compared to the other two choices and does not require any meeting minutes or many documents. Essentially this would be the easiest to transition into.
The other nice thing about the LLC is that the company finances can be divided however I see fit.
Now the S-Corp. So far it's been a hard choice between the S-Corp and the LLC. I'm leaning towards an S-Corp more right now because of the Tax benefits. Let me explain. In an S corp, only the salary paid to the employee-owner is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, there is the potential to realize substantial employment tax savings.
Here is a sample of the differences between an LLC and an S-Corp.
Mary owns a print shop. In keeping with the industry standard, Mary decides that a reasonable salary for a print shop manager is $35,000 and pays herself accordingly. Mary’s total earnings for the year are $60,000: $35,000 paid in salary and the remaining $25,000 paid as a distribution from the S corp. Mary’s total employment tax is $5,355 (15.3% of $35,000).
If Mary were the owner of an LLC, she would have to pay employment tax on the entire $60,000, equaling $9,180. But as an S corp, she realizes savings of $3,825 in employment tax.
[Source]
Now, I figure that since I am a PPC Marketer, I can realize the Salary of a standard Pay per click manager or Affiliate manager. I need to find out how much that is. This will help me get around the whole "self-employment" look on all the loan applications and such.
It seems like it's 10x harder for self employed people with good records to get loans and stuff. (My Dad has run small businesses for 25+ years so I'm not speaking from personal experience)
The downside to the S-Corp is pretty big however.
1. You have a lot of formalities and documents. Doh that's not fun. I guess not everything about owning a growing business can be fun.
2. You have to pay Employee tax as you go. This seems like a very daunting and scary task. Thankfully my dad uses this great service called ADP to do payroll and they take care of all that employee tax. So I figure I could use them for this part. With the LLC you just pay self employment tax once at the end of the year (something like 15.9%).
So all that being said and done, what have I decided?
Am I ready for an S-Corp? It's a big step.
Either way I plan on incorporating an LLC or S-Corp sometime around January 16th-ish.
I plan to contact a professional before doing so, I just need to think things through before I spend money on expensive conversations. 
The LLC is pretty good and easy. However, once you reach certain income levels it makes more sense to move up. With your current goals and already existing income – go with the corporation and rather pay to have it setup. Payroll services are cheap. It all makes life easier and saves you money. I still have the LLC for my business, but even at much lower income levels I see the benefits disappearing, because I make a full-time income from normal employment.
This is a great post because it’s definitely something that I’ve been doing research on over the last month or so.
I’ve haven’t made a decision yet, but since I’m just getting going I’ll probably just setup an LLC until I reach a larger income base. It seems to be the easiest option right now for a one man show such as myself.
Great timing on this post, man. Tax season is in the air and affiliates are fretting over taxes.
S Corp is my recommendation. My accountant said that’s the way for me to go….
I found this extremely helpful. I’m not interested in forming a registered company, but I’ve always been interested in the science behind it.
Good luck, Jony!
Thanks everyone for your advice and comments.
Thanks for the useful info. I will be looking into S Corp for sure. I haven’t really put to much thought behind it since I’ve been so busy. I didn’t even realize I made $190,000 til I reviewed all my stats 2 days ago. I will also be looking into payroll services and an accountant.
Great job trypp!
Let me know how things work out
if you are a single owner, I’d go with an LLC – you can set it up so that you keep the money in the business bank acct, and don’t pay taxes on it until you transfer it to your own personal bank account.
-Mike
While LLC is a good option you should talk with a local CPA or local tax lawyer because tax rules and regulations vary by state, and you want to do what makes the most sense for your business. not just going off what other reccomend. I have been thru the process, i was LLC but then changed to LP due to tax savings and other retirment advantages in Texas. Trust me the money you spend on a good CPA or tax lawyer is WORTH it!
Yea. I’m certainly not going to go off just any advice. I just like to have all the knowledge I can have before going to a paid professional.