Project Description

  • Married Couple, Two Kids, One Property
  • Husband ran a small graphic design company in California earning business income reported on 1099MISCs
  • Prior years filed as sole proprietor using Schedule C form which subjected all profits to self-employment tax
  • For 2018 tax year, we created an LLC and converted it into an S-Corp to limit his exposure to self-employment tax
  • Husband earned $200,000+ net profits in 2018 tax year
  • Placed him on the company’s payroll at a reasonable salary with the remaining profits shielded from self-employment tax
  • Final Results:
    • Before S-Corp conversion
      • Owed IRS $32,809 self-employment tax
    • After S-Corp conversion
      • Owed IRS $6,120 self-employment tax
    • That’s $26,000+ savings in tax!