Consulting/LLC or Corp Experience

[Patrick Fleming EA]

On Wed, 24 Apr 2002, David P. Schwartz wrote:

> 
> Hey, Patrick, thanks for the excellent response!
> 
> One clarification:
> 
> > > The main difference is that personal income is taxed BEFORE deductions are
> >
> > Not true. Income tax is applied to the amount left after subtracting
> > personal and dependent exemptions, and your itemized or standard
> > deduction- whichever applies.
> >
> > > applied, while business income is taxed AFTER expenses.  Also, if you are a
> >
> 
> I wasn't very clear here.  What I was referring to was that Corp's generally
> pay taxes on what's left after deducting various expenses, while individuals
> usually pay (withholding) taxes on their income _before_ any deductions can be
> applied (that's what employer withholding does).
> 
> The point is, this typically gives Corp's more flexibility in their capital
> planning and spending than individuals often get using a Schedule C.

With good planning this can be adjusted as an individual as well. The goal 
would be to not come up short at the end of the year. Either entity may be 
required to pay on at least a quarterly basis depending upon income levels 
and the previous year's tax liability.
Of course at this point we are so off topic that it isn't funny- 
surprisingly we haven't been flamed off the list yet. 

 
> > -David
> 
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-- 
Patrick Fleming, EA
http://myhdvest.com/patrickfleming
Licensed to represent taxpayers
before Exam, Appeals, and Conference 
divisions of the IRS