How is your business set up? - massage and bodywork professionals2024-03-28T16:35:31Zhttps://massageprofessionals.com/forum/topics/how-is-your-business-set-up?commentId=2887274%3AComment%3A303306&x=1&feed=yes&xn_auth=noThanks for the tips. I spoke…tag:massageprofessionals.com,2013-02-06:2887274:Comment:3033062013-02-06T17:30:39.040Zreba627https://massageprofessionals.com/profile/Reba627
<p>Thanks for the tips. I spoke with my accountant and he suggested I keep myself as an LLC, mainly for most of the reasons you listed.</p>
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<p>Thanks for the tips. I spoke with my accountant and he suggested I keep myself as an LLC, mainly for most of the reasons you listed.</p>
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<p></p> Yes and No.
As an S-Corp, y…tag:massageprofessionals.com,2013-02-06:2887274:Comment:3032522013-02-06T16:59:23.228ZRelax & Rejuvenatehttps://massageprofessionals.com/profile/RelaxRejuvenate
<p>Yes and No.</p>
<p> </p>
<p>As an S-Corp, you can make yourself an employee and pay yourself a salary, BUT</p>
<ul>
<li>You need to set up separate accounts and keep them that way</li>
<li>Your salary has to be "reasonable" given the revenue of the business -- being on the low end may strain this. YOu have to take on the hassle of being an "employer" whjich means monthly payroll tax filings etc.</li>
<li>The "bonuses" you pay yourself are actually "shareholder distributions" which are taxed…</li>
</ul>
<p>Yes and No.</p>
<p> </p>
<p>As an S-Corp, you can make yourself an employee and pay yourself a salary, BUT</p>
<ul>
<li>You need to set up separate accounts and keep them that way</li>
<li>Your salary has to be "reasonable" given the revenue of the business -- being on the low end may strain this. YOu have to take on the hassle of being an "employer" whjich means monthly payroll tax filings etc.</li>
<li>The "bonuses" you pay yourself are actually "shareholder distributions" which are taxed as income, but are exempt from FICA, FUTA and other payroll taxes. But your distributions have to be "reasonable" in relation to your salary -- meaning certainly not MORE than your salary, but there is no set rule to what "reasonable" is</li>
<li>You can also pay dividends to yourself as a shareholder instead of or in addition to the distributions. These are taxed at the dividend rate (15% for most income brackets...FYI this is how Warren Buffett and Mitt Romney get paid, which makes their tax rate lower than their secretary's)</li>
<li>MAJOR RED FLAG -- since you are an MT, you can't subcontract massage work to other MTs if you are an employee (which is different than your role as a sole proprietor). You have to make them employees. Sub contractors can only do work you are not licensed/qualified to do -- which is why your handyman subs out electrical work and General Contractors sub out almost everything, If you are just having someone tak more of your same kind of work, then you have an employer-employee relationship, and are now responsible for half of their FICA, FUTA, all of UI taxes and WC insurance, which means you will need to restructure your pay scale to others to account for these higher costs.</li>
</ul>