S-corp questions for a newbie?

[Steve]

I have the following questions as I am going to form a s-corp. I have some software gigs which require some travel, so in order to maximise the profit and write off the expenses, I am planning to setup a s-corp and get paid

1. I live in TX but can i file for the s-corp in Delaware since filing fee is the cheapest in Delaware. when I file my 1120 in march, will i incur any state income taxes ?
2. If I have no business in a year, then can i continue to work on w2 and have the s-corp actively open. What charges will i incur, filing fee of 80$ ?, any minimum tax ?
3. Is the march filing of 1120 every year the only time I file taxes ? DoI have to file taxes any other time of the year to IRS.
4. How and when do I incur a loss in my s-corp ?
5. Is it true that with LLC, I have to pay double of FICA taxes, but in S-CORP the distributions is not charged with FICA. and with LLC the advantage is that my personal wealth will not be affected if someone were to sue me ?
What should I file for ? a LLC or S-CORP.
6 When I file for medical insurance, I will buy it in the name of the s-corp, will pre-existing conditions be covered ?
7. How do I cover my wife/children for medical insurance, is there any difference for filing medical under business vs individuals ?
8. What are the various deductions I can take with the s-corp.
9. If I employ other contractors/employees in my s-corp how do i pay them, do i withheld taxes or pay them the entire amount.

Thanks

 

[Wayne Z]

You should sit down with an accountant and discuss things before you act.

For most small businesses, registering in their home state is normally the easiest and cheapest in the long run. I am in Minnesota. I just registered an LLC......in Minnesota.

Neither Texas nor Delaware has an income tax. However, Texas has a "franchise tax". Delaware has an annual fee. You would be liable for Texas taxes as you are in Texas. The fact that your company would be registered in Delaware does not avoid those.

With an S-Corp., you must pay yourself a "reasonable" salary. You can't take a small salary and huge distributions to avoid FICA taxes. The extra tax prep, accounting and payroll fees will sometimes be higher than any FICA taxes saved.

Any legitimate business deductions are deductible for an S-Corp or LLC. Nothing extra is magically deductible because you have an S-Corp.

If you "employees" work for you, you withhold taxes. If "contractors" work for you, you do not. The law decides who is an employee and who is a contractor. You don't get to pick and choose.

Sit down with an accountant before you get to far in.