According to what I've just discovered, it may be possible to reduce your taxes by forming an S Corp instead of just dealing with the self employment tax structure as is. What are some of the benefits of forming an S Corp?
- Potentially lower self employment taxes.
What are some of the risks?
- Additional IRS scrutiny if you're making a decent amount of money (more than the usual).
- Additional state taxes in places like California.
Conclusion
I don't think S-Corps are for everyone. They are legally complicated and make sense if you have the time and money to hire a legal professional to set you up appropriately and hire an accountant to make sure you handle everything right. Accounting is very difficult in cryptospace and Steemit may attract scrutiny from the IRS just by how it is set up. If a person can afford to hire the professionals then why not but if they are a small blogger it probably isn't worth it. Nothing I say should be taken as legal advice as I'm not a lawyer or legal professional.
I going to look into this more! Thanks
I definitely agree that this can be an excellent option for some people. There are also a couple other benefits to forming an S-Corp. You can deduct Steemit related blog expenses before getting taxed on the remainder. The corporate veil here also gives you some protection against unlimited personal liability in the case of lawsuits.
Best Article seen in this week
Keep it up buddy
The selection of your topic is mimd blowing
I highly Appropriate you
Work more hark
Keep ot up buddy
Great point, I ended up making my carpentry business for the same thing and I it honestly never even crossed my mind to look at steemit that way!! Thank you
So just by creating a company and declaring this as a business, you will end up paying less? LOL
In my opinion, no legal advice offered, forming a trust that is funded by your Steemit would be an easier route to preserving your earnings. It would be much less hassle than forming an S-Corp. A lawyer would still be virtually required but you wouldn't have the same responsibilities that come with being an S Corp. Seriously interesting post though! You're going to have me up all night researching this one.
@dana-edwards, is the money we make on Steemit treated the same as if I made this money on Youtube?
The reason I ask is because you can write off things like cameras, costumes, plane tickets, etc. as long as it was used to make Youtube videos (it will be treated as business expenses). And, all of this can be done without the need to make an LLC or S-Corp.
You can probably capitalize these items in your corporation than take deprecation over the useful life of the camera. If it is a big ticket item, you will not be able to expense it all in one year.
I'll have to look into that. More questions to ask a CPA :((
You may be paying less income taxes from the income paid out by the S-Corp to your personal bank account, however you will have to pay taxes on the business level as well. This means you will be taxed twice instead of once on your personal income tax. If you wanted to build and eventually sell the account as a business it may be good to form an S-Corp because they can be transferred, but another way avoid paying high taxes is to use an LLC (limited liability company) as a sort of savings account. Income into the LLC is not taxed, only when you pay yourself from the LLC you pay taxes, and in the case of a lawsuit, that money can not be touched because it is not considered a personal asset.
You people do You know that America is bankrupt.
I know this doesn't apply to me but the topic and article is pretty great. Worth looking at.
curiously, isn't it possible to avoid paying tax altogether using the blockchain? am i missing something?
qualified expenses become questionable. You will also have to prepare financial statements at the end of each fiscal year - which can become costly. You will need a piece of accounting software to manage all your debits and credits and if you have no understanding of accounting this can become difficult. I think you have to incorporate the opportunity costs along with the incremental costs into your calculations before you decide to do this. If you are making less than $50,000 a year it is pretty much pointless. If you were to do anything to save money on taxes, it would be best to move to a state like Nevada, where there are no state taxes on personal income.