Sole Proprietorship vs Incorporation

Net Income from a Sole Proprietor (Form 1040 Schedule C) buiness is subject to Self-Employment Tax, whereas Net Income from a S Corporation is not subject to Self-Employment Tax.

Differences in Self-Employment Tax  

 This table shows the difference in SE tax between the two different entities with the same Net Income.

SELF-EMPLOYMENT TAX
 SOLE PROPRIETOR
 S CORPORATION
 Net Income
 SE Tax
 Net Income
 SE Tax
1,000
153
1,000
0
5,000
765
5,000
0
10,000
1,530
10,000
0
15,000
2,295
  
15,000
0
20,000
3,060
20,000
0
30,000
4,590
30,000
0
40,000
6,120
40,000
0
50,000
7,650
50,000
0
60,000
9,180
60,000
0
70,000
10,710
70,000
0
80,000
12,240
80,000
0
90,000
13,770
90,000
0
100,000
15,300
100,000
0

 This savings would be every year that you have Net Income!! 

Net Income Still Subject to Income Tax Regardless of Business Entity

Edward Opperman CPA Lafayette Indiana can help you employ this in your business.  Don't delay, the longer you wait the more in tax you pay.  Completethe form below or call us today at 765-588-4335.