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    2 Replies Latest reply on Sep 12, 2009 2:36 AM by biz.coach

    startup fund

    jim001 Newbie
      Hi

      I plan to be an owner(also an employee) operated LLC(with S-corp tax election). I am curious about startup investement for this setup.

      plan #1: Invest enough, so that business can pay my first year salary plus operating expenses(business setup, equipments, registration cost, marketing, legal fees, cpa fees) and so forth.

      plan #2: Invest bare minimum money for setting up business without drawing any salary unless business is able to pay it. As soon as business is generating enough revenue, it pays employee salary( and therefore payroll/employment/w2 taxes.)

      With respect to IRS and local state (franchise) tax perspective - is plan #2 a valid and legal option ?

      Thanks
      Jim
        • Re: startup fund
          LUCKIEST Guide
          startup fund, Welcome

          Who are you?? Go to Members page and share some info.

          To me, both plan # 1 and # 2 sound the same, except you have to invest more funds to pay yourself a salary.

          Is it legal?? You have to ask a lawyer

           

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          • Re: startup fund
            biz.coach Wayfarer
            Jim, talk with your accountant about employee payment options. There are sometimes ways to structure it via loans from you to the company (or vice versa), or minimum wage payment, or bonus payments that might alleviate tax burden. There are so many variables that general answers are difficult.