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Hi,
I really appreciate any feedback and help regarding this matter.
A client of mine is running an LLC as solo member. schedule C, last year he made
almost $130K and paid $13,500 for income tax.
He asked me if it is to his best of interest to convert to an S corp and how much would he save!
I know an LLC member has to pay SE tax on the whole income
but under S corp he only pays SE tax on the distributions after deducting the reasonable salary.
Assuming his salary was $80K per year.
I run the same numbers and created to scenario on pro connect to demonstrate the idea but i ended up with the same exact owed tax with is $13500!.
Why did not we see any difference in this case?
More over under Scorp the salary paid would have to deduct %15.3 on it.
Which means an LLC is much better in this case!
Any explanation would be highly appreciated!
Thanks
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