one large payment is not cheaper than periodic payments. You can use company money for non business expenses but the IRS may catch up to you at some point. The penalties are not that stiff, but I wouldnt do it. It would be better to put your effort into building your business.
Here is one (IANAL and you need one to do this - if you need one I can recommend one)
Form an LP, make your C corp a general partner in the LP, you will be officers in the C corp. You will be limited partners in the LP. This gives you liability protection. The LP becomes your operating entity. Money flows into the LP from clients. It turns out that LP's can distribute money to limited partners without paying social security tax. There is no minimum salary required to do this. Your actual employees can be employees of the C corp as usual.
You will save around 15K/year per person who does this.
If you want to get money out completely tax free, look up a SEP IRA. The SEP ira lets you contribute 25% of your income up to 49K tax free. But it must be available for all employees. The company can contribute up to 50%.
Meals are only 50% deductible and it probably isnt worth doing, but if you guys go to dinner and talk business then your should. But if you put your cars into an LLC you can have your C corp pay the LLC and then deduct all car related expenses (insurance, gas, maintenance, interest). You can do the same with medical related expenses. IANAL - get a lawyer who understands how to do this.
There are structural advantages to keeping it a C corp (ie when raising money). LP and LLC have no real conception of shares in the same was as the C corp
Money in an IRA is still retirement money (not cash in hand) -- you have to pay tax if you want to get the money this year
Meals are 100% deductible if you are working -- read irs publication 15b on fringe benefits
For the cars, you can also opt for the 50 cent per mile deduction (useful in high mileage situations)
Comments
one large payment is not cheaper than periodic payments. You can use company money for non business expenses but the IRS may catch up to you at some point. The penalties are not that stiff, but I wouldnt do it. It would be better to put your effort into building your business.
Here is one (IANAL and you need one to do this - if you need one I can recommend one)
Form an LP, make your C corp a general partner in the LP, you will be officers in the C corp. You will be limited partners in the LP. This gives you liability protection. The LP becomes your operating entity. Money flows into the LP from clients. It turns out that LP's can distribute money to limited partners without paying social security tax. There is no minimum salary required to do this. Your actual employees can be employees of the C corp as usual.
You will save around 15K/year per person who does this.
If you want to get money out completely tax free, look up a SEP IRA. The SEP ira lets you contribute 25% of your income up to 49K tax free. But it must be available for all employees. The company can contribute up to 50%.
Meals are only 50% deductible and it probably isnt worth doing, but if you guys go to dinner and talk business then your should. But if you put your cars into an LLC you can have your C corp pay the LLC and then deduct all car related expenses (insurance, gas, maintenance, interest). You can do the same with medical related expenses. IANAL - get a lawyer who understands how to do this.
There are structural advantages to keeping it a C corp (ie when raising money). LP and LLC have no real conception of shares in the same was as the C corp
Money in an IRA is still retirement money (not cash in hand) -- you have to pay tax if you want to get the money this year
Meals are 100% deductible if you are working -- read irs publication 15b on fringe benefits
For the cars, you can also opt for the 50 cent per mile deduction (useful in high mileage situations)