Think what you will ...
... but you would be wrong. :)
"It is my understanding that ALL earnings of a sub-S corp are at individual rates."
So far so good.
"Thus there is no difference between salaries, bonuses, directors' fees, etc."
Generally speaking, you are still doing good.
"I believe to do what you're talking about, you have to have a regular corporation ..."
Oops. No you don't. In fact a regular corporation (also known as a C-Corp) is a bad way to go for this technique.
You are focused on the 'income tax' and you are basically correct.
The savings comes from the employment taxes paid or not paid.
I'll try again.
In a simple world, if you only had $87K income and no expenses ..
Sch C; the SE tax (employment tax if you will) is approx $13,300. In add'n to that you then get to add the $87K to your other income and then pay federal, and possibly state, income tax at individual rates.
Sub-S; the corporation decides what a reasonable salary is and pays you that. Let's say it is $20K. They pay it to you and you get a W2 from them. The corporation pays SE tax on $20K, or approx $3,100 and then gives the rest of the $87K, or $67K, to you in the form of a dividend. Here is the savings -the dividend is not subject to SE tax, either by you or the corporation.
So, you get the same $87K in earnings as from the Sch C except now it is in the form of a $20K W2 and a $67K dividend. And you get to add both/either ($87K) to any other earnings you have and pay 'income' tax at individual rates.
But, between you and the corporation you paid $10,100 less in SE (employment) tax.
See?
The question you should be asking yourself now is .. who said the $20K salary (that is subject to the employment tax) is fair? It seems to screw the government and is a great deal for me.
The next logical thought is, I'll pay myself ... nothing ... take all the $87K as a dividend, and save the whole $13,300!
Yeah! This tax stuff is a no-brainer!!
Unfortunately, the government's next logical thought is your salary should have been the full $87K.
Whos right? Whos wrong? That, OldCootfrom VA, has been an on going bitch between the IRS and taxpayers for a long long time. Let's just say the answer is usually less than $87K, but more than zero.
Suffice it to say, within this scenario is a tax savings to be had.
Is it good enough for you? You need to consult with someone you trust that understands this technique.
Fair enough?