@EXODUS wrote:
Thank you, I see I am just trying to figure out how to pay less lol I am getting killed right now and i am assuming because I’m an llc and I should switch to an S Corp and pay my self a salary so I don’t pay self employment tax on say 200k or more that the business makes. I never expect to make as much as the business makes.
You should get professional tax and legal advice. You must pay yourself a fair market salary (what you would pay someone else to do the same job). If your business has a net profit of $200,000, but a fair salary for what you do is $100,000, then you are doing pretty well for yourself. If you pay yourself a salary of $100,000, you and the business will pay employment taxes and you will pay regular income tax. Then you could take the other $100,000 as a dividend, and pay the regular income tax on that, but not social security, medicare or self-employment tax. In other words, save about 7.65%.
You aren't going to save any more money than that by giving away your services. You simply make less profit because you don't bill as much as you could have billed. And there are other costs and risks of forming an S-corp.
Deductions are not the magic formula to keeping more money after tax. For example, suppose you bought a $100,000 Cadillac or F250 (depending on the business). That could cut your profits and tax in half if you claim section 179 depreciation. But's not free money -- you might have saved $25,000 in taxes, but you spent $100,000 to do it, and now you have a very expensive vehicle you might not really need, instead of having $75,000 in the bank.
You may want to be looking at an SEP-IRA, you can contribute up to 25% of the profits (up to around $70,000 in total) to a pre-tax retirement account. That's a way to lower your taxes and have the money invested.
https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep
There may be other things you can do, but see a professional.
