Even without outright cheating... if you're able to run your money through a company, it _feels_ criminal the sorts of benefits it brings.
I do pay my wife part of my income so it hits a lower tax rate (this is fine), and she does do my books (she's a CPA, so that tracks).
But there's a staggering amount of expenses I'd normally be paying out of pocket with my post-tax dollars that are now being paid by "the company". Anything the company pays for I end up paying $0 in tax on that money. Like probably 20% of the stuff _I would be paying for anyway_ is paid for by the company and I pay 0% tax instead of 50% tax. Like, what might have been $30k/yr in expenses before now costs me $15k/yr and lets me put $7.5k in my pocket out of what's left.
Health expenses? Yeah, why not establish a self-funded company health plan and pay those out of untaxed dollars too!
It's especially stark in things like "home office" expenses... if I claim it on my personal taxes (whether from my company or working for someone else), I can't claim any mortgage interest as an expense. If I claim it as my company's place of business though I can claim that and much more.
It costs me like $60/yr to keep renewing the corporation, and if I wasn't married to a CPA probably another $600-800 for tax filing. It easily puts 10x that back in my pocket.
And I mean, yeah, it's definitely way easier to cheat on your taxes if you're so inclined. And from what I've seen of the filings my wife has done over the years for accounting firms, bending the rules is pretty much the norm. Many an argument has been had over "no, that's not the letter of the rules I'm not letting you file that" and "okay but you're throwing money away because literally everyone else does that because there's no way to catch it".
It's been decades since I read this in the "IRS Small Business Tax Guide", but I still repeat it periodically. "The IRS expects that every tax payer will aggressively work to minimize their tax burden."
IOW, as long as you color within the lines, they really don't care. My tax guy is pretty good at telling me what might trigger an audit vs what IRS thinks of as perfectly normal.
Making retirement contributions as the employer (in addition to what you can do as the employee) is another great benefit, assuming the employees are all family.
I do pay my wife part of my income so it hits a lower tax rate (this is fine), and she does do my books (she's a CPA, so that tracks).
But there's a staggering amount of expenses I'd normally be paying out of pocket with my post-tax dollars that are now being paid by "the company". Anything the company pays for I end up paying $0 in tax on that money. Like probably 20% of the stuff _I would be paying for anyway_ is paid for by the company and I pay 0% tax instead of 50% tax. Like, what might have been $30k/yr in expenses before now costs me $15k/yr and lets me put $7.5k in my pocket out of what's left.
Health expenses? Yeah, why not establish a self-funded company health plan and pay those out of untaxed dollars too!
It's especially stark in things like "home office" expenses... if I claim it on my personal taxes (whether from my company or working for someone else), I can't claim any mortgage interest as an expense. If I claim it as my company's place of business though I can claim that and much more.
It costs me like $60/yr to keep renewing the corporation, and if I wasn't married to a CPA probably another $600-800 for tax filing. It easily puts 10x that back in my pocket.
And I mean, yeah, it's definitely way easier to cheat on your taxes if you're so inclined. And from what I've seen of the filings my wife has done over the years for accounting firms, bending the rules is pretty much the norm. Many an argument has been had over "no, that's not the letter of the rules I'm not letting you file that" and "okay but you're throwing money away because literally everyone else does that because there's no way to catch it".