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What Is The Minimum Income For An S Corporation?

I get this question a lot.  

There’s a low-point, certainly, where it just isn’t worth it after factoring in logistics.

Or accountant fees.

Or the real (semi-intangible) biggie: Time.

Your time is worth money.  If you are in business, and performing a service or product for someone…

…the time you spend on that has a value.

I often ask my wife: could I be paying someone to do blah, blah, or blahblah for us, and actually come out ahead based on what my time is now worth?

Plus, sometimes that plumbing or carpentry fix is best left to someone that can do it faster, and that will stand behind their work anyway!

Does this answer your question?  Not quite yet…?


Let’s tackle this a bit, shall we?

You HAVE to file a Schedule C if you make over $400.  Did you know that?

If you make $400, or $1,000, or even $10,000 your effective SE tax rate is going to be relatively low.  These amounts assume you have one or a few smaller 1099’s, things like that.  OK?

So I wouldn’t do it at that level, no.

Now if your business is on the level of a Going Concern you can save on SE taxes making as little as $30K, BUT this is where you want to factor in time and possibly accounting fees.  

If you need an accountant to pay for your various filings I would say this is not enough.

Remember, you HAVE to take a reasonable salary from your S Corporation.  

Some don’t, I know, but they’re tempting fate, because the IRS Code specifically says you have to.  

Did you know I have a year-round program that I call STRAP, for short.

That’s Strategic Tax Recurring Analysis and Preparation.

I used to be in the acronym-happy U.S. Army.  Can you tell??? 

Anyway, what I charge to take it all off of someone’s plate so they can focus on what they specialize in would be covered by the savings from $30K as a reasonable salary and $30K as ordinary income, $60K total.  

If you tackled it yourself you could see savings at a lower salary, as I said above, but at that cost of time figuring it all out.

If you bought Solopreneur S Corp Strategy already, first of all THANK YOU!  Second of all, you could realistically do that election and compliance while you’re firing up your rockets. 

Once you get bigger and more lucrative, and start hiring good help to take things over for you I’m here to help!

So sure, you COULD save money (at the cost of DIY time) at a lower salary.

By the way, for my Realtors, at least in Colorado: even in COVID times you should, with a decent effort be making $100K, and that’s some real money for yourself as well.  

Net of what I charge you’re still saving thousands for yourself as well, over $3,500 for sure.  AND you have a full-time accountant!

Any questions?  Click the "Schedule Time With Me" link on this website.


{Originally posted on July 1, 2020 via Facebook}

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