How best to structure a small business and pay the least taxes.

I’ve retired. In my spare time, I’m about to convert a hobby into a part-time business. I estimate that the business will have revenue of about $40k and will show a profit of about $20k per year. If I declared the income, I would pay a lot in
taxes (fed, state, FICA) I don’t need the money and would like to route the profits to the college fund(s) of my six grandchildren. Although I do most of the work, they are all chipping in some time to help sort, package, and mail the product to
customers. The product is printed material based on a copyright that I hold.

Thoughts?

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On 5/12/2022 2:04 PM, NadCixelsyd wrote:

How best to structure a small business and pay the least taxes.

I’ve retired. In my spare time, I’m about to convert a hobby into a part-time business. I estimate that the business will have revenue of about $40k and will show a profit of about $20k per year. If I declared the income, I would pay a lot in

taxes (fed, state, FICA) I don’t need the money and would like to route the profits to the college fund(s) of my six grandchildren. Although I do most of the work, they are all chipping in some time to help sort, package, and mail the product to
customers. The product is printed material based on a copyright that I hold.

Thoughts?

Keep track of expenses. Hire your grandchildren if possible and pay them
well and make sure they pay heavy into FICA. They'll need it. Other than
that, if you are trying too hard to avoid taxes, maybe you should just give
you product away and avoid profits.

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According to Wilson <[email protected]>:

On 5/12/2022 2:04 PM, NadCixelsyd wrote:

How best to structure a small business and pay the least taxes.

I’ve retired. In my spare time, I’m about to convert a hobby into a part-time business.

Keep track of expenses. Hire your grandchildren if possible and pay them
well and make sure they pay heavy into FICA.

Yes, although the FICA contributions are a fixed percentage of the pay,
no option about that.

If you meant they should make large contributions to Roth IRAs, I completely agree.

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Regards,
John Levine, [email protected], Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly

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<< The foregoing was not intended or written to be used, >>
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<< The Charter and the Guidelines for submitting posts >>
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<< are at www.asktax.org. >>
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