本文发表在 rolia.net 枫下论坛The income from a peasonal company will be treated as personal income. You have to report all your income for each fiscal year. You have to pay 50% tax for the portion over $60k.
Corporation is like a separate person from the owner/shareholders. For the income from a corporation, the government will levy corporate tax (about 21% of net income). You can deside what to do with the income after tax, either leave it in the corporation as "Retained Earnings", or take a portion or whole of that to home as "Dividend". Your personal income from the corporation includes your own salary/bonus from your business activities and dividend you take after corporate tax. You report your personal income and pay tax again. To that sense, you will be double taxed as a corporation and a person.
The benefit of corporation is to avoid to pay high tax for high income. Let's say you make $160k/y. As a personal company, you have to pay $50k personal income tax for the portion over $60k ---- ($160-$60)x50%=$50k. In a corporate case, you can claim $60k as employment income and leave the remaining $100k within the corporation. For that $100k, you need to pay $21k corporate tax, and you will still have $79k left. But you can not touch that $79k without paying personal income tax. What you can do is that, if a bad business year occurs in the future, you can claim retained earnings from previous good years as dividend income.
To conclude, in my personal opition, personal company suits for small business, whereas corporation is for high income business. As to where to draw the line, that's upto you.
My opition may not be right. Any correction is welcome.更多精彩文章及讨论，请光临枫下论坛 rolia.net
Corporation is like a separate person from the owner/shareholders. For the income from a corporation, the government will levy corporate tax (about 21% of net income). You can deside what to do with the income after tax, either leave it in the corporation as "Retained Earnings", or take a portion or whole of that to home as "Dividend". Your personal income from the corporation includes your own salary/bonus from your business activities and dividend you take after corporate tax. You report your personal income and pay tax again. To that sense, you will be double taxed as a corporation and a person.
The benefit of corporation is to avoid to pay high tax for high income. Let's say you make $160k/y. As a personal company, you have to pay $50k personal income tax for the portion over $60k ---- ($160-$60)x50%=$50k. In a corporate case, you can claim $60k as employment income and leave the remaining $100k within the corporation. For that $100k, you need to pay $21k corporate tax, and you will still have $79k left. But you can not touch that $79k without paying personal income tax. What you can do is that, if a bad business year occurs in the future, you can claim retained earnings from previous good years as dividend income.
To conclude, in my personal opition, personal company suits for small business, whereas corporation is for high income business. As to where to draw the line, that's upto you.
My opition may not be right. Any correction is welcome.更多精彩文章及讨论，请光临枫下论坛 rolia.net