Self Employment

Jason Hall jason at
Thu Jul 21 14:57:55 MDT 2005

On Thursday 21 July 2005 10:18 am, Jeff Schroeder wrote:
> Thus, I don't understand how you can say the "other federal things" go
> away with an S corporation.  Perhaps you're referring to paying
> EVERYTHING as dividends, rather than payroll?  That's certainly
> possible,

Well, it depends on your state, and hans will need to check NM's specifics vs 
Utah, which is actually quite generous on s-corp and llc.  But yes, you can 
draw as a dividend, but if it's your primary source of income, you should pay 
a minimum salary first, then take the rest as dividend.  First, that get's 
you passed over an audit for simply not having an income.  Second, it allows 
you to trim yourself when times are lean, and pay yourself extra when you 

Still, paying a minimum salary, even with the company having to pay it's part 
of the taxes, is still far less than deducting it as a sole-proprietorship.  
You get nailed real nasty with that, believe me, I did it once.

The difference of going sole to company, was night and day.

Dividends are totally legal, and fine.  When used appropriately.

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