File LLC in Nevada or Local State, S-Corp Tax Election

[Top]

I live in Louisiana and I want to incorporate my coaching business.

However, I am wondering, would there be any advantage to electing to have the LLC taxed as an S-corp in Nevada, since the S-Corp tax election would allow the company to operate in Nevada wouldn't I be considered a w-2 employee and only pay Louisiana taxes on my personal income which would be separate from the company's profits?

Some solid feedback would be great. Thanks.

[GlobalWealth]

I live in Louisiana and I want to incorporate my coaching business.

However, I am wondering, would there be any advantage to electing to have the LLC taxed as an S-corp in Nevada, since the S-Corp tax election would allow the company to operate in Nevada wouldn't I be considered a w-2 employee and only pay Louisiana taxes on my personal income which would be separate from the company's profits?

Some solid feedback would be great. Thanks.

No matter where your LLC (or S-corp) is located, you would have to pay LA taxes on the total income. By having an S-corp (or LLC taxed as an S-corp) you only pay the 15.3% self-employemnt tax on your salary though. The advantages to NV are asset protection and privacy.

[joshuaeric]

My buddy just looked into the best state to setup his LLC and Nevada is still it.

As Bobby said, you still have the self employment tax from your state. Self employment tax is extremely high though, not good. I was paying a little over 30% in 2008.

Don't forget about the "flow through" concept. If you have 20k sitting in your business account at the end of the year, I believe that gets recorded as your income. I could be wrong on this, but you may want to look into it.

I think if you're the sole proprietor you can't be an employee. Not sure though.

[GlobalWealth]

My buddy just looked into the best state to setup his LLC and Nevada is still it.

As Bobby said, you still have the self employment tax from your state. Self employment tax is extremely high though, not good. I was paying a little over 30% in 2008.

Don't forget about the "flow through" concept. If you have 20k sitting in your business account at the end of the year, I believe that gets recorded as your income. I could be wrong on this, but you may want to look into it.

I think if you're the sole proprietor you can't be an employee. Not sure though.

For the majority of my clients, we set up NV LLC's. WY and DE are also excellent. Self employment tax is 15.3%, but this does not include your regular income tax which varies based on income bracket. But you certainly have many exemptions which will reduce your taxable income giving you many advantages. If you are an LLC, you can elect to be taxed as an S-corp (even if you are the only member) and pay the 15.3% only on your salary. For example if your business earns $100k/yr and you pay yourself a salary of $50k, you only pay the 15.3% on the salary and you would pay the regular income tax on the full $100k. For earned income, this is a huge advantage.

[vincentchan]

I found these two legal sites extremely helpful when I started my company:

Startup Company Lawyer
The Startup Lawyer

Search them on Google.

Try it. I think you can find your answer there.

Vincent Chan