Self-Proprietorship vs. Incoroporation

We feel there are numerous advantages to using an "S" Corporation (a small business corporation which is not taxed as a corporation) for anyone who received non-employee income (1099 Income) in excess of $40,000.00. A few (but not all) items to consider are as follows:

• Paying payroll/self employment on a "reasonable salary" vs. your total business income.
• Being able to deduct medical expenses directly against income under certain circumstances.
• Establishing deferred compensation plans and IRAs for deferral of income.
• Tax planning which can provide pretax income to a family member for such items as college education.

Summary

A good business/tax plan consists of numerous items. Small Business Solutions, Inc.'s approach is to accumulate excellent records and timely process the records within an "S" Corporation. Historically, we have been able to save an individual's earning in excess of $50,000 in non-employee compensation (1099 income) approximately $5,000 or more per year in federal income and payroll taxes. State taxes will vary from state to state. As income increases the dollar amount of savings normally increases accordingly.

As of January 31, 2003, we serve clients in thirteen states and one foreign country.