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    kfcbowl's Avatar
    kfcbowl Posts: 1, Reputation: 1
    New Member

    Sep 7, 2014, 10:38 AM
    Corporate tax setup

    I need ideas on how to set up my business to be the most tax advantageous.

    I currently am a short term stock trader in my spare time with my own money. Im fairly good at it and make roughly 25-35% annual return pre taxes. I am looking to turn this into a full time business. In order to raise more capital ( I currently only have 80k.) and gain some tax benefits. I think setting it up a corporation would be helpful, if not for taxes, then for raising capital.

    Ultimately my stock system will only work with a maximum capital of 400k. So right now, I was planning on forming 4 C-corporations each holding up to 100k capital each to keep the tax rates on my profits under the 15% mark. Also keep in mind I have a 5% flat state cooperate tax, but no state personal income tax.

    Long term, I would like the profits that exceed our 100k limit to roll into a local nonprofit and another corporation that I would like to set up to make loans.

    I’m not sure if my setup is the best idea, so I’m looking for out of the box ideas or any input.

    I don’t really need to take a paycheck from this business, I would like to just let it keep building until retirement.

    Thanks in advance
    AK lawyer's Avatar
    AK lawyer Posts: 12,592, Reputation: 977

    Sep 8, 2014, 10:48 AM
    I'm guessing you are thinking in terms of the capital gains tax rate. But keep in mind that if you set up these separate C corporations for the sole purpose of keeping profits under $100 K (and accumulating such profits rather than paying dividends) they might be considered holding companies, and incur tax liability that way.

    I also am concerned that setting up a non-profit may, depending on how it is structured, be considered a for-profit venture in disguise.

    I have to admit to being a bit rusty on these aspect of tax law. Obviously you should run this by a tax attorney or accountant with specific expertise in these matters.

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