USA S-Corp Questions

[dcRealtor]

Hi, I have a VA single member LLC about 10 years old, going to elect S-Corp status this year. Trying to understand some things I've read a little better, have just a couple questions.

1. Could someone tell me what would be the easiest way to use Intuit TaxCaster to mimic an S-Corp for tax forecasts? Let's say I have a $75,000 salary and take $60,000 in distributions. So my hypothesis is the easiest or most correct way would be to take 75k and multiply that by 1.0765 and enter that into "Net Income" for business income rather than to enter 75,000 in wages b/c if you do it that way the app will think you have another employer who is paying the other half of employment taxes? Then where does the $60k distribution go as misc. income or qualified dividend?

Oh yes I know that TaxCaster is not perfect however it has always been extremely simple and accurate for predicting my taxes as a Schedule C filer.. I'm hoping I can work it out to do easy forecasts for an S-Corp as well..

2. I've been reading about I'm going to have to figure a basis for my S-Corp? I can't quite understand it. Let's say right now I have $40k in my business checking and $20k in business debt. Does that mean if I elect S-Corp status for my LLC beginning FY2018 that my starting basis is $20k?

 

[Tyson]

1) I don't know what that TaxCaster software is, but based on your numbers I'd estimate that incorporating your business in that manner would save you about $8,500 in FICA taxes. However you'll also pick up a lot of other expenses and workloads; you'll need to start paying state annual filings, worker's compensation, state unemployment insurance, possibly franchise taxes, and then on top of that you might want an attorney and accountant on retainer to answer questions such as these for you. An accountant should be able to handle most of this for you and I'd guess they would charge you ~$300ish to $500ish per month. Thus it could be slightly better ($1000 or $2000 better) for you to incorporate, but consult an accountant first for a better answer.

2) Yes.