Death of Small Business, thank you for playing America

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    Jun 17, 2010 8:13 PM GMT
    good bye gayborhood cafe,

    good bye favorite sex shop,

    good bye family doctor.

    http://www.forbes.com/2010/06/17/tax-increase-senate-hedge-funds-personal-finance-s-corp-payoll-taxes.html

    S corp distributions to be taxed on top of regular income tax and already double the payroll tax as empolyee/employer..

    make room for the big dogs, filthy gnats MUAHAH
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    Jun 17, 2010 8:21 PM GMT
    Did you even read the article you posted? It mentions nothing about cafes, but notes that the tax will affect primarily consultants.

    S-corps are also regulalry used by performers, many of whom have gone on record as saying they don't pay their fair share of taxes because of the S-corp loophole.
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    Jun 17, 2010 8:36 PM GMT
    851.gif
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    Jun 17, 2010 11:53 PM GMT
    You undermine your own argument when you acknowledge that it's a "pass through corporation." And Obama and the Democratic congress have given a tax break to 90% of Americans. I am confident that Jim Carry can pay his fair share. Not to mention that taxes are not putting small businesses down, rather it's the huge corporations that you never tire of defending that have done that.
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    Jun 18, 2010 6:16 PM GMT
    S-corps have an advantage in that they are less than 25 shareholders, and income is taxed just like it would be if you were a person, as opposed to the corporation (the s corp) paying tax, and each shareholder paying taxes on dividends. The s corp holds the advantage that the corp itself doesn't get taxed, but, each person that pulls money out of the corp pays at their individual rates.

    In a C-corp, which is beyond 25 shareholders, the corporation is an entity that pays taxes on its income. Each person paid from the corporation also pays taxes on their respective income, but, of course, anything paid out by the C-corp is an expense on their books.

    C-corps have a higher tax burden as I explained above. I'm not an accountant, but, that's the general jist of it.

    S-corps allow you to pay taxes ONCE for each shareholder, as they take the money out of the S-corp. The S-corp itself isn't really subject to tax in that way. Hence, their attraction to small business. LLPs are kinda the same way, but, you'd need an accountant to explain the various nuances.

    With regard to employment taxes, (FICA, Medicare) up until the passage of the new health care bill, unearned income has not been taxed. Perhaps you've heard Warren Buffet talk about it. Warren makes mostly unearned income. That is, he doesn't work a job. It's unearned. That income has NEVER been subject to FICA/medicare/employment taxes prior to the passage of the new bill. It's only fair that all income should be subject to tax for the sake of FICA/Medicare, and that is changing soon. Up this point folks with unearned income rode for free. That's changing.

    With regard to the law change, I don't agree with it, as I HAVE a S-corp. The neat thing about a S-corp is that, in some ways, it works as a savings account in that the equity you build, unless you take it out, goes untaxed. I.e. S-corp is pass thru and is NOT subject to corporate income tax.

    Seems like there's always a loop hole, and this law is trying to change it.

    In my case, we don't use our S-corp. It's still cheaper to do a 1040 long form, since I work from home, and so on.
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    Jun 18, 2010 6:27 PM GMT
    ...except C corp marginal tax rate is MUCH lower than individual tax rates passe thru S-corp

    lucky my dad works for a large company, so long small time dreamers, future barbers, marketers, and crappy gay restaurants of the world.