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> Corporate Federal income tax on $100,000 if you and your partner had a C-corp instead and took 40k salaries then left $100k in the company.

> Roughly $22,250 (About 22%)

I think your shot-in-the-dark about getting "unexpected news from his accountant" is close to the mark, because the author didn't seem aware that the C-corp would have taxed the $100K at all. The comparison point was completely missing from the article.

The other missing point about C vs S/LLC: Later on, when the corp has grown like a weed and it's time to take money, there will be a double taxation under C that is very disadvantaged.

Honestly, this is a case where the HN commentary is better than the article it points to.




This guy is focusing on taxes when the better question to answer would be: "What corporate structure makes sense for you given your goals?"

There are a whole range of issues to consider of which taxes are but a single one. All sorts of things can complicate this which is why you need to really do your homework before you set up a structure.

For one thing, the author doesn't understand "retained earnings" in a C-corp. You can't just let that cash pile up indefinitely. There are "retained earnings" taxes that can hit you pretty hard if you're not doing things right. You also will get hit with the dreaded double-taxation issue once you do decide to take the cash out. And he's totally neglecting the issue of STATE corporate taxation which adds another layer of complexity to think about.

You choose your structure based on who is putting in money, how involved they will be in the business, what is at risk, and who gets what if the company is successful. That's it.




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