CPA made recommendation of changing our sole proprietorship to an S Corporation.
Been in business for 30 years. We would just like to know, being at full retirement age do
we take taxes (federal State Medicare SS) out of his checks he would receive from the company?
You can be retired or retirement age and still be a shareholder in an S corp. With an S corp, profits will be distributed to the shareholders--the S corp will not pay federal income tax. Unfortunately, the S corp must still withhold federal taxes and FICA and Medicare. It is a bit frustrating, but even when one is receiving Social Security benefits, one must pay FiCA and Medicare taxes.
The advantage of the S corp is that the company can pay the shareholders a reasonable salary. Then profits over and above the salaries are not subject to FICA and Medicare taxes. Those profits are like dividends.
In short, you can convert to an S corp. I suggest you follow the advice of your CPA.
Yes. That is not uncommon at all and is an excellent way to prevent personal liability in the event of a lawsuit or the like.
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