Start a LLC or S Corp ?

G

gcexpress

Registered Users (C)
Hi folks,
I highly appreciate your expertise on my plans. I have received my green card last year. Now I would like to start a company (either S corp or LLC) and also hire people on H1 or L1 visas. The services provided will be IT consulting.
If I register a S corp, can I hire people on H1 visas just as employees and pay them salaries and draw all the profits/dividends to myself. Or do you think LLC is a better option if I wish to recruit employees on H1 or L1. I heard that on LLC there are more tax implications especially the FICA taxes. Which is a better option. Right now I am a employee working on W2 through another consulting firm. I am planning to do a corp-to-corp once I register my company.
Nevertheless, I will also get opinion from CPA once I receive your expert advise. Does anyone among you who have been through the process help me as to how much it would cost me to get everything setup including the CPA fees before I can start hiring people for my company.

Thanks again for all the support you all offer each other.
Best Regards
-gcexpress
 
Thanks Joe

Hi Joe,
Thank you so much for offering your input. I do not have a CPA as yet, but plan to approach one very soon. What do you mean by payroll taxes ? I am planning to go for H1 for the near future, but will certainly pay the prevailing wage.
If you can help me with the preliminary ideas before I step into a CPAs office that would be very helpful.
Say I get $110K anually for an employee A who is on H1B and I pay $60K as salary. At this point how much taxes would I pay.........I assume nevertheless these will be same whether its a S corp or LLC.
Please give me some more insight if possible.
Please clarify payroll taxes ?

Thanks very much
-Gcexpress
 
If you are LPR ou can open an S Corp, but you are limited to an C Corp or LLC if you do not have yet you residence.

If you do not intend to aquire other companies or to have more than a limited number of partners (I think it was 25) the LLC is the way to go.
 
Thanks Joe & MVU

Hi Joef & Mvu,
Thank you both. Actually my head is way over my soul. There was a specific reason for asking that Q. I wanted to know whether I could afford an US employee and still make some profit or rather go for an international professional. Because I would like to offer our services for a set price that I have in mind.
I am totally a novoice as fas as corp taxes are concerned and as such wanted all possible feedback.

Thanks a bunch
-gcexpress
 
Corp taxes and payroll taxes

gcexpress said:
Hi Joef & Mvu,
Thank you both. Actually my head is way over my soul. There was a specific reason for asking that Q. I wanted to know whether I could afford an US employee and still make some profit or rather go for an international professional. Because I would like to offer our services for a set price that I have in mind.
I am totally a novoice as fas as corp taxes are concerned and as such wanted all possible feedback.

Thanks a bunch
-gcexpress
Click to expand...

Corporation income tax: The corp has to pay income tax on the profits made every year. It depends only on the profits made. If it is a C- corp the profits are taxed first and then the profit after tax can be distributed to share holders as dividend. This dividend is again taxed at the share holders personal income tax level. (means twice taxed). If the share holder is an employee of the corp they can be paid salary and the salary amounts are considered expenses for the corp and so not taxed at corp level. (Corp profit is calculated after deducting all salaries and wages and other expenses)

For an S-Corp the share holders are permitted to take earnings (or dividends) and it is taxed only at the individuals personal tax level and not at the corp level. (means only one time taxed)

For any type of corp employment tax (pay roll taxes) is common. You see on your pay stub deductions for Medicare tax and Social Security Tax. The employer has to pay an equal amount from their pocket also to the goverment. In addition to that employer has also to pay State and Federal Unemployment taxes from their funds.
 
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