

Running a microISV - hermitcrab
http://successfulsoftware.net/2009/01/05/running-a-microisv/

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tptacek
Note that in the US, there are strategies for "paying a small salary and the
rest in corporate-taxed dividends", as the author recommends; they involve
setting up an S-Corp.

People routinely recommend this is a way to avoid FICA, which applies only to
actual payroll. However, the IRS requires you to pay yourself a "reasonable"
salary. Taking $10k in salary in $50k in distros is likely to get you audited.
During an audit, the IRS gets to decide what your "reasonable" salary actually
was.

Not worth it.

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hermitcrab
In the UK "paying a small salary and the rest in corporate-taxed dividends" is
normal practice and completely legitimate to the best of my knowledge.
Obviously that might not be the case in other tax jurisdictions. Seek
professional advice.

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tptacek
Not a complaint about the article. I liked it. =)

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hermitcrab
Just clarifying. ;0)

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hermitcrab
The 'nuts and bolts' of running a small software company based on the
experiences of a UK-based microISV: accountants, banking, tax etc.

