We will then see how much Kim saved in taxes.  Remember - you are not Kim.  We dreamed up Kim for demonstration purposes only.  Your situation is real life.  We need to discuss your specific situation.  You might save more or less in taxes than Kim. To have a question answered about your possible tax savings, please contact Skane Tax Solutions.

Now, to see what Kim saved by incorporating -

Business Taxable Income
	Self-Employed	Corporation
Business Gross Income	$100,000	$100,000
Less Regular Business Expenses	-30,000	-30,000
Less Deductions Available to Corporation Only - Not Available to the Self-Employed	-0-	-5,000
Less Kim's Salary and Bonus	-0-	-12,000
Less Payroll Taxes, etc. on Salary	-0-	-1,500
Less California Corporate Income Tax	-0-	-800
Net Business Taxable Income	$70,000	$50,700

 

Personal Taxable Income
Calculation of Personal Taxable Income	Self-Employed	Corporation
Net Business Taxable Income	$70,000	$50,700
Salary & Bonus from Corporation	-0-	12,000
Add Other Taxable Income	5,000	5,000
Less Personal Deduction & Exemptions	-25,000	-25,000
Less Deduction for 50% of Self-Employment Tax Paid	-4,946	-0-
Personal Taxable Income	$45,054	$42.700

 

Taxes Paid
Type of Tax Paid	Self-Employed	Corporation
Personal Income Taxes - Federal	$9,326	$8,668
Personal Income Taxes - California	2,726	2,578
Corporate Income Taxes - Federal	-0-	-0-
Corporate Income Taxes - California	-0-	$800
Self-Employment Taxes or Payroll Taxes	9,891	1,500
Total Taxes Paid	$21,943	$13,546