Have formed a LLC in NYC. It is single member. Sole purpose is to sell mobile apps. Running business part time. From home.
1. At what income number do I pay less tax as a s-corp over a sole proprietorship Right now I believe it's very close to $133K in revenue. This is from following all the way through to after income taxes are applied.
2. What time period each tax year can I switch tax elections from S-Corp to Sole Prop or vice versa in future?
3. How often can I switch status?
4. If your selling software via the app store, but do all the development at home in NYC, does that constitute all sales from NYC?
Say for net income of $100,000
They key levers seems to be a) what I deem a reasonable salary for s-corp b) what of my income is deemed to be generated from outside of NYC
Filing as a Sole Proprietorship (which is what the IRS treats a single member)
• Self Employment Taxes = 13.3% (realize this rate would drop if earning over the $110,100 due to limit on SS tax)(as of 2012) (also realize that I can deduct 1/2 of SE tax against my income tax)
• UBT (Unincorporated Business Tax) = 4% of net income over $35K
• Filing Fee =$25
Social Security Tax (part of SE) $10,400
Medicare (part of SE) $2,900
UBT Tax $2,600
Filing Fee $25
Sole Propetiership: Net Income after filing + SE tax, but not before income taxes $84,075 rate of 15.93%
Filing as a S-Corp (which in NYC they treat as a corporation)
• NYC Corporate Tax - 8.85% of NYC net income or 8.85% of salaries + 15% of 30% of net income
• SE Tax on "reasonable salary" - I'm using a number of $75K number, not sure if this is right.
• Biennial Statement $4.50
Reasonable Salary $75,000
NYC Corporate Tax $6,969
SE Tax on Income $9,975
Biennial Statement $4.50
Claim none outside $83,051 rate of 16.95%