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Bootstrapped Development Agency since 2011
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August 11, 2011
We started our company!
We officially registered our company as an LLC on this day. We instantly went for an S-Corp structure (which didn't really pay off until later until the company exceeded $40k+ in revenue).
If we were to do it again, make sure that your legal, accounting, and insurance folks are all able to communicate.
4 Comments
Why didn't it pay off until $40k+ revenue? (Sorry, curious as a non-American!)
No problem! So when you file taxes as a LLC, and you write yourself a check for your own payroll, you pay "Self Employment Tax".
When you file as an S-Corp, the income "passes through" to the owners individually (meaning if two people own 50%, and the company profits $40,000 -- each owner's income is $20,000). This means you do not have to pay the "Self Employment Tax".
According to our accountant at the time, the tax benefits would not kick in until 40k+ revenue per year.
This is why I stick to programming. Tax laws are crazy 😀
🤯🤯🤯🤯🤯(Don't know what else to say!)
Hahahaha! Your emojis perfectly draw my reaction when the accountant was explaining this to me.
Have yourself a great week! 👍