I’m looking onto starting my own LLC and some of the documents comparing LLCs with other business structures say something like “C-corporations are subject to double taxation. Double taxation occurs when shareholders pay taxes on their salary at the same time that the corporation pays taxes on its profits”
As I understand it, if a corporation makes, say, $100,000, they deduct all costs (e.g. salaries) and then pay taxes on the profits. So, if the salaries total, say $80,000, then we could have something like:
[li]$80,000 goes to the employee, who is taxed at the income tax rate[/li][li]$10,000 are various costs in running the company[/li][li]$10,000 is the remaining profit for the corporation, which is taxed at the corporate tax rate[/li][/ul]
I don’t see the double taxation. What am I missing above?
Bonus question: How do I find a good tax advisor? Are there any companies with good reputation with branches in various states that you would recommend, or is it best to find a local guy/girl via word-of-mouth recommendations?