While you may want to compare the "taxes" between the two entity types, you really need to look at this from a longer term perspective, and as such, you should sit down with a tax professional and model this out:
- We don't know what type of business you are operating
- You need to consider liability issues that may occur and which structure minimizes any risk to you
- The business type will impact a "reasonable" salary requirement at the S corporation level. This is a hot topic as an audit issue with the IRS.
- I believe your sole proprietorship example didn't factor in the 2.9% unlimited Medicare tax component
- You need to consider the benefit of the basis build up that the S corp may provide upon an eventual sale of the business
- Does a Roth IRA make more sense to you long term
This forum is helpful in a number of situations, but is not beneficial in a situation such as this that is better served with an in-person consultation. This is like trying to do the same thing as texting.....just doesn't work efficiently.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
