[Company Name]

Business Structure Selector

[Date]

[Company Name] CONFIDENTIAL

Gray cells will be calculated for you. You do not need to enter anything in them.
Planned number of owners 2
Required protection from personal liability Low
Net income for business $350,000
Owner's share of income $175,000
Salary received from business $50,000
Owner's other income subject to self-employment tax $25,000
Owner's marginal tax rate 28%
State income tax rate on individual income 5.00%
State income tax rate on business income 8.00%

1 of 3 10/25/2017
 Sole Limited Liability
Proprietorship Partnership Corporation S Corporation Corporation (LLC)
Option available? No Yes Yes Yes Yes
If no, reason option not available Number of
planned owners
Election to be treated as corporation? (Yes/No) Yes
Business tax return required None Form 1065 Form 1120 Form 1120S Form 1120
Protection from personal liability Low Low High High High

Estimated Tax Liability Caused by Business

Salary from business N/A $50,000 $50,000 $50,000 $50,000
Business income currently taxable to owners N/A $175,000 $0 $175,000 $0
Percent that is self-employment income N/A 100% 0% 50% 0%

Income from business subject to self-employment tax N/A $175,000 $0 $87,500 $0

Business income taxable to business N/A N/A $175,000 N/A $175,000

Individual Tax
FICA tax withheld from salary N/A $3,825 $3,825 $3,825 $3,825
Tax on individual tax return:
Federal income tax N/A $63,000 $14,000 $63,000 $14,000
Self-employment tax N/A 11,127 0 9,891 0
Tax saved on self-employment tax deduction N/A -1,558 0 -1,385 0
State income tax N/A 11,250 2,500 11,250 2,500
Total individual tax N/A $87,644 $20,325 $86,581 $20,325

Business Tax
FICA tax withheld from wages N/A $3,825 $3,825 $3,825 $3,825
Tax on business return:
Federal income tax N/A N/A 59,500 N/A 59,500
State income tax N/A N/A 10,000 N/A $10,000
Total tax paid by business N/A $3,825 $73,325 $3,825 $73,325

Tax on future year dividend on personal return:

Federal income tax N/A N/A 49,000 N/A 49,000
State income tax N/A N/A 6,250 N/A 6,250
Total tax on individual income N/A $91,469 $79,400 $90,406 $79,400
Total tax on business income $0 $0 $69,500 $0 $69,500
Total tax on combined income N/A $91,469 $148,900 $90,406 $148,900
Effective tax rate individual income N/A 40.65% 35.29% 40.18% 35.29%
Effective tax rate business income N/A N/A 39.71% N/A 39.71%
Effective tax rate combined income N/A 40.65% 85.09% 40.18% 85.09%

2 of 3 10/25/2017
[Company Name]
Tax Calculations
[Date]

[Company Name] CONFIDENTIAL

Gray cells will be calculated for you. You do not need to enter anything into them.
Individual Income Tax Rates
35%
33%
28%
25%
15%
10%

Self-Employment (SE) Tax

Maximum earnings $90,000
Social security tax rate 12.40%
Medicare tax rate 2.90%
Sole Limited Liability
Proprietorship Partnership S Corporation Corporation
SE income from business $0 $175,000 $87,500 $0
Other SE income 25,000 25,000 25,000 25,000
Total SE income 25,000 200,000 112,500 25,000
Taxable social security income 23,088 83,115 83,115 23,088
Social security tax 2,863 10,306 10,306 2,863
Medicare tax 670 2,410 2,410 670
Total SE tax 3,532 12,717 12,717 3,532
SE tax from [Company Name] 0 11,127 9,891 0

FICA Tax for Employees and Businesses

Maximum earnings $90,000
Social security tax rate 6.20%
Medicare tax rate 1.45%

Corporate Tax Rate Schedule

Of the Total
If taxable income is Over But not over Tax is amount over corporate tax Owner's share
$0 $50,000 15% $0 $0 $0
$50,000 $75,000 $7,500 + 25% $50,000 $0 $0
$75,000 $100,000 $13,750 + 34% $75,000 $0 $0
$100,000 $335,000 $22,250 + 39% $100,000 $0 $0
$335,000 $10,000,000 $113,900 + 34% $335,000 $119,000 $59,500
$10,000,000 $15,000,000 $3,400,000 + 35% $10,000,000 $0 $0
$15,000,000 $18,333,333 $5,159,000 + 38% $15,000,000 $0 $0
$18,333,333 35% $0 $0 $0
Total $119,000 $59,500