homepage Welcome to WebmasterWorld Guest from 54.167.75.155
register, free tools, login, search, pro membership, help, library, announcements, recent posts, open posts,
Become a Pro Member
Visit PubCon.com
Home / Forums Index / WebmasterWorld / Professional Webmaster Business Issues
Forum Library, Charter, Moderators: LifeinAsia & httpwebwitch

Professional Webmaster Business Issues Forum

    
managing taxes with HUGE income variations year-to-year?
disgust




msg:3775007
 1:55 pm on Oct 28, 2008 (gmt 0)

I've gone from years where I've earned well over 100k, to years where I've essentially operated at a loss.

I'm wondering if there are any general guidelines to dealing with this.

obviously it would be much more ideal if I could "split" that ~100k over two years, one of which I would've normally earned nothing on.

is there any practical way to do this?

apart from just the tax savings, I'd like to "minimize" my personal income while keeping assets available for the business or for future years where it may operate at a loss.

I'm going to be going back to college, and student aid is based on your previous year's income. if my previous year happened to be an incredible one versus one of my terrible ones, that'd affect things rather dramatically. is there any way to deal with this?

I'm also a bit confused about s-corp/c-corp taxation. I understand you pay yourself a "reasonable salary." net revenue past that is passed through... does this still count as "income" or would it classify as something like capital gains? would capital gains still count as regular income for those sorts of purposes?

 

LifeinAsia




msg:3775063
 3:30 pm on Oct 28, 2008 (gmt 0)

You really need to talk to a tax professional to get correct answers based on your specific situation. Here are some generic answers, that may or may not apply to your specifics.

Although losses really [action made by a vacuum cleaner], assuming you have things setup correctly, losses from one year carry forward to a future year and can be deducted against revenue. So it hurts now, but it can ease other pain later.

An S Corp. is basically a pass-through entity. That means that whatever profit (or loss) the company makes flows through to your personal income tax return. A C Corp is a separate legal and taxable entity. You (as a person) are only taxed on any money taken out from the company (whether it be salary, dividends, etc.). The company is taxed separately on profits. For financial aid, a C corp would be better, as you could retain profits in the company until the next year to make your personal situation look more poverty-stricken. (However, to prevent people from doing exactly that, many financial aid office require disclosure and tax records of any businesses owned.)

Since you're asking the C-corp/S-corp question, I am assuming that you don't already have a corporation or LLC setup? Again, consult with your tax advisor, but it often makes sense to form one- there is a lot more you can "play" with as far as deductions, credits, and write-offs.

Global Options:
 top home search open messages active posts  
 

Home / Forums Index / WebmasterWorld / Professional Webmaster Business Issues
rss feed

All trademarks and copyrights held by respective owners. Member comments are owned by the poster.
Home ¦ Free Tools ¦ Terms of Service ¦ Privacy Policy ¦ Report Problem ¦ About ¦ Library ¦ Newsletter
WebmasterWorld is a Developer Shed Community owned by Jim Boykin.
© Webmaster World 1996-2014 all rights reserved