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I want to incorporate my website empire which earns a lot of money. It has no employees but I plan on paying "rent" to myself to avoid some taxes.
Which corporation type should I create? I'm very confused about it.
S Corps. Similar to LLCs, S corps receive flow through tax treatment. However, an S corp must allocate its taxable income to the individual stockholders according to their ownership stakes in the company. Taxable losses at the entity level may be used to offset personal taxable income of the individual stockholders, but only to the extent of the tax basis of their interests in the entity.
C Corps. A C corp is a separate taxable entity independent from its stockholders. Thus, the earnings of a C corporation are generally taxed twice: once at the corporate level on the corporation’s taxable income and a second time at the stockholder level on dividends or distributions. In addition, C corps often must pay higher state franchise taxes than LLCs or S corps.
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You are confused and so am I. If what you are thinking is tax avoidance then I’d say you have to think twice because it is not easy to fool IRS. They are always one step ahead that your ploy will only backfire on you. Just with what you said about renting from yourself that is already a paradox and how do you plan to have an empire when you have no workers? It is again another paradox that you have to think about.
Do you really need ? Why paying taxes ? Let`s keep all the money ;)