One of the few states in the union with a gross receipts tax is Oregon. The tax was enacted in 2018 and is known as the Oregon Business Tax. Businesses with annual gross receipts of more than $1 million are subject to the tax. For gross receipts up to $1 million, the tax rate is 0.57%, and it is 0.325% for gross receipts over that amount.
Because it is not based on net income, the Oregon Business Tax differs from taxes in other states. Instead, it is based on the money a company makes. This means that if a company’s gross receipts exceed $1 million, it must pay the tax even if it is not profitable.
Both LLCs and S Corps are pass-through businesses, which means that the business’s gains and losses are reported on the owners’ individual tax returns. The tax rates are the same for S Corps and LLCs. S Corps might, however, end up paying higher taxes than LLCs.
This is so that S Corps can afford to pay their owners a fair wage. Payroll taxes, such as Social Security and Medicare, are deducted from the salary. However, LLC owners are exempt from the requirement to pay themselves a wage, so they are exempt from paying payroll taxes.
The property in an LLC is owned by the LLC, not the individual owners. Although the LLC’s owners have a stake in the business, they do not own the real estate. The property must be managed and maintained by the LLC. Should I Convert My LLC to a S Corp? Several aspects of the firm, such as its size, profits, and long-term objectives, will determine whether or not to convert an LLC into a S Corp. Generally speaking, converting the LLC to a S Corp may be a smart idea if the business is profitable and the owner wishes to lower their self-employment taxes.
The process of changing an LLC to a S Corp is not without drawbacks, though. For instance, S Corps must pay its owners a respectable income and have more complicated tax filing obligations. A tax expert should be consulted before making any decisions, it is crucial to remember this. Should My LLC Indemnify Me?
To indemnify someone is to shield them from suffering financial loss. LLC owners who want to shield themselves from personal liability should think about indemnifying their company. This implies that the owners’ private assets will be safeguarded in the event that the LLC is sued.
In conclusion, firms in Oregon that generate annual gross receipts of more than $1 million are subject to a gross receipts tax. Although both LLCs and S Corps are pass-through corporations, S Corps may wind up paying more taxes than LLCs. The property in an LLC is owned by the LLC, not the individual owners. The decision to convert an LLC to a S Corp depends on a number of variables, and LLC owners should think about indemnifying their company to shield themselves from liability.