Make It An S Corporation!

If you're setting up as a small business you'd have to be a fool not to make it an S corporation. One of the huge advantages is that income from the business flows through directly to the owners as income, meaning that there's only one level of taxation.

However, as Stephen Nelson recently pointed out, you also pay both sets of Social Security on any salary you take from the company. Whereas, if you pay the profits out as a dividend then you don't, a potential saving of $7,500 a year: which, if put into an IRA will add up to a great deal more than SS will ever give you.

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