Social Security Wage Base for 2010-Unchanged!

The Social Security wage base will remain $106,800 for 2010, the first time the index hasn’t budged since 1971. The tax rates will not change, either:
6.2% for FICA and 1.45% for Medicare. Self-employed taxpayers will pay 15.3%  on the first $106,800 of their net earnings and 2.9% on any amounts above that.

This is a great reason why not to operating as a sole proprietorship in 2010. When you incorporate as an LLC taxed as an S corporation or an S corporation it puts in you a position to have both earned income which is subject to self employment taxes and distributions which are NOT subject to self employment taxes!Make sure you pay yourself a reasonable salary according to the IRS.

Make sure to have a reasonable salary and don’t wait until January 2010 to incorporate! Do that in December or before and have the start date on the SS4 application for the EIN number to start on January 1, 2010 (unless you are starting now and doing business now).

Questions? Call NCP at 1-888-627-7007!