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Professional Corporations
The corporate name of a professional corporation must contain the words, "Professional
Corporation", or the abbreviations of "Prof. Corp., or "P.C." or "PC". The original director
and stock holder must have a certificate to practice the state regulated profession, such
as a Realtor.
BILL SMITH, PROFESSIONAL CORPORATION
Corporation", or the abbreviations of "Prof. Corp., or "P.C." or "PC". The original director
and stock holder must have a certificate to practice the state regulated profession, such
as a Realtor.
BILL SMITH, PROFESSIONAL CORPORATION
How Tax Savings Works
- The Reason is to save on Social Security Taxes. 15% per year.
- Pay yourself a reasonable salary. ($12,000) a year and pay social security on this
portion of the income. - Pay the rest out of your Professional Corporation in Dividends. No Social Security
of Medicare taxes are taken out of any profits you take as dividends. - Must have a license to be the Professional Corporation such as a Realtor
License.
The IRS will require the corporation to pay you a realistic salary for your
work as an employee of the corporation. That pay should be reported on
W2 and will be subject to the normal employer and employee FICA taxes.
work as an employee of the corporation. That pay should be reported on
W2 and will be subject to the normal employer and employee FICA taxes.