Jane Shay operates a management consulting business, The business has been successful and now produces a taxable income of $150,000 per year after all "ordinary and necessary" expenses and depreciation have been deducted. At present business is operated as a proprietorship; that is, Jane pays personal federal income tax on the entire $150,000. For tax purposes, it is as if she had a job that pays her a $150,000 salary per year. As an alternative, Jane is considering incorporating the business. If she does, she will pay herself a salary of $75,000 a year from the corporation. The corporation will then pay taxes on the remaining $75,000 and retain the balance of the money as a corporate asset. Thus Jane's two alternatives are to operate the business as a proprietorship or as a corporation, Jane is single and has $3500 of itemized personal deductions. Using the 2009 tax schedule, the income tax Jane would be required to pay operating her business as a proprietorship is

2009 Personal Exemption - $3650

2009 Standard Deduction - $5700

2009 Tax Rates for Single Individuals

If your taxable income is over -	But not over-	The tax is:	Of the amount over-
$0	$8350	10%	$0
$8350	$33,950	$835 + 15%	$8350
$33,950	$82,250	$4675 + 25%	$33,950
$82,250	$171,550	$16,750 + 28%	$82,250
$171,550	$372,950	$41,754 + 33%	$171,550
$372,950		$108,216 + 35%	$372,950

2009 Corporate Income Tax Rates

Taxable Income	Tax Rate	Corporate Income Tax
Not over $50,000	15%	15% over $0
$50,000 - 75,000	25%	$7500 + 25% over $50,000
$75,000 - 100,000	34%	$13,750 + 34% over $75,000
$100,000 - 335,000	39%	$22,250 + 39% over $100,000
$335,000 - 10 million	34%	$113,900 + 34% over $335,000
$10 million - 15 million	35%	$3,400,000 + 35% over $10 million
$15 million - 18,333,333	38%	$5,150,000 + 38% over $15 million
Over $18,333,333	35%	Flat rate at 35%

Interest Factor Calculator

		$12,600
		$41,750
		$33,102
		$26,350