The salary is subject to self-employment taxes (payroll taxes) and the dividends arent.
For legal advice, please ask a lawyer.
For example, youll still be liable for any damages caused by your personal negligence.
This article contains general legal information nero backitup 4 update and does not contain legal advice.One big reason sole proprietorships are so popular is that they are by far the simplest and cheapest way to organize a one-owner business.Quite simply, if you start running a business by yourself and do not incorporate or form an limited liability company, you are automatically a sole proprietor.However, this is not necessarily the case if your business is organized as an S corporation.Sole proprietorships dont pay taxes or file tax returns.An S-Corporation is a special type of corporation formed through filing a certificate of formation with the office of the Secretary of State where the company is headquartered, as well camtasia 2 mac activation key 2013 as the necessary tax documentation with the Internal Revenue Service.Sole Proprietorship, like the name implies, is tied to a sole business-person, and legally, theres no separation between the individual and his or her business.With protection from liability, the ability to raise i20 1.4 asta diesel with sunroof capital, as well as the option for having up to 100 shareholders, forming an S-Corporation can be a very good business decision.So, why would you pay more taxes when you dont have to?Forming a C corporation provides excellent legal protection, but it has many onerous requirements and is horrible from a tax standpoint.You dont have to do anything special or file any papers to set up a sole proprietorship, other than the usual license, permit, and other regulatory requirements your state and locality imposes on any business.When comparing Sole Proprietorships.Ready to start your business?What Is an S-Corporation?Corporate Bylaws, shareholder and director meetings, and more record keeping.
However, the Corporation itself remains a distinct, separate entity from the shareholders.