T
TheOne
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- Thread starter
- #21
DKSuddeth said:explain this. - well the basic understanding I have of S-Corps is that you don't take a salary. All of the business profits, minus expenses (including re-investment), flow through to the owners as salary and are taxed as personal income.
you either take a salary or you don't. do YOU understand business?
You said this:
As I said, if you pay yourself $50,000, make profit of $150,000 then you are taxed at $200K.
You don't pay yourself in an S Corp. All of your profits are your pay. Therefore, the $150K you reinvested is not taxed because it's not profits. You know nothing...it is evident.
As for SS, Medicare, you do pay that on the profit you decided to keep. Not your salary. It's called self-employment tax.