Welcome to WebmasterWorld Guest from 18.104.22.168
Forum Moderators: LifeinAsia
Thanks for your help.
An LLC or S-Corp is a good business entity when you are first starting off and don't expect to keep a significant amount of capital in the business. These are known as "pass through" entities, because all of the company income "passes through" to you as personal income on which you can be taxed. So if you have 4 websites, all of which will generate $200K, you can see why having $800K as personal income isn't the best scenario. As an LLC or S-Corp, you'll pay taxes on that entire amount, regardless of whether you left most or all of it in your business account.
With a C-Corp, the corporation is taxed on what it earns, not you personally. So, if you paid yourself $100K as a salary/bonus, you'll pay personal income tax on that $100K, and the corporation will pay taxes on the remaining $700K, because your salary is deducted off the top as an expense. Make sense?
Also, it's best to avoid having too much income flowing into a single tax return, so consider setting up a C-Corp for each website business. From what I understand, you'll pay less overall corporate tax on 4 tax returns of $200K each, than on a single tax return of $800K.
Again, I'm not an accountant, so don't take my word as Gospel. Keep looking for a good CPA or tax attorney that can help.