BTW, when I invest in a corporation, I do get double taxed. The profits are taxed at the highest possible income tax rate, then I pay 15% tax on the distribution of profits.
Of course if I work for that corporation, I opt to take the "profits" as a bonus. I pay all the taxes in that case, but at least there isn't double taxation.
That sentence makes no sense to people with no AWS experience. But if you give someone with Linux experience secure shell access to a DigitalOcean server they can hit the ground running.
It's not rocket science:
instance = virtual server ("droplet" in DO speak)
terminate = shut down
ephemeral store = local disk
An EC2 instance is just a virtual server so anyone who knows Linux, Windows, BSD or even Solaris can "hit the ground running" there too.
That being said, do they dump your instance if they reboot the physical server? I was under the impression that "Oh we want to upgrade they hypervisor kernel, your instance is toast", was fairgame/default on Amazon.
Nope. In most cases, you get two weeks warning before a physical host is decommissioned. I've gotten as little as 24 hours (guessing it was a more significant than usual hardware issue).
When that happens, you can just stop the instance, then start it again. That moves it onto a new physical host. If you don't do it in the 14 days, Amazon does it automatically. No loss of data, and just a few minutes of downtime if your startup scripts are OK.
Amazon should really advertise this, if that is the case. I was under the impression that Amazon couldn't be relied on as a VPS.
As I said above - the terminology can get hairy pretty fast. It's valuable to take stock of what you really need persisted, and what use can be made of 'scratch disks'. Local ephemerals are fast and cheap (included in the price of any instance). They come with the operational overhead of needing to rsync data off of them yourself if you want to retire that instance however.
For data that must be stored, I can use a EBS, or a database instance.
Like the grand-parent said, you pick what makes sense. Saying that ephemeral storage is a bad thing would be true if that were all they offered, but it isn't, and it ephemeral images are sometimes preferred.
So no, its not FUD in that case at all.
You're right. But you're not going to avoid the stock market (where you might get paid in dividends) because you want to avoid double taxation. However, when forming a company for the first time, you'll hear double taxation cited as a reason you might not want to form a corporation. This is stupid because you're not going to pay yourself in dividends. Of course there are many reasons you might choose one business form over another -- I'm just saying that double taxation really isn't one of them.
Likewise, if you are deciding between digital ocean and AWS -- there are many reasons why you might want to go with one over the other. One of the reasons is not because you lose all your data when you restart a machine on AWS. I mean, look, I'm considering giving DO a shot for various reasons, but AWS losing my data because of some oversight in their service that DO has fundamentally engineered around isn't one of them.
In both cases, I'm not saying one is better than the other -- all i'm saying is some distinctions are subtly stupid to the point of being manipulative. As in FUD. That's my full thought process on this matter, I don't think I've got anything past that, haha
Unless I'm missing something with AWS, what oversight in their system causes you to lose data? They are quite upfront and transparent that your data does not stick around unless you use EBS.
In summary: typical pass-through entity distributions are typically taxed as self-employment income and subject to the SET which attempts to recover the missing employer's half of tax payments. You cannot avoid all employer's half of taxes by taking them as distributions, and whomever told you that has misled you.
Now, what you might actually be thinking here, and would be correct, is that for those who earn less than a certain income (which would place them in the top tax bracket), the effect of applying all of those payments as self-employment income generally results in a lower tax rate than the corporate tax rate, and allows for deductions that companies may not have available to them.
What you're talking about does not apply to LLCs, it is a special situation only related to S-Corps. Generally speaking, pass-throughs such as LLCs all distributions are taxed as self-employment wages, except under certain conditions.
Up to a limit, your salary as owner is deductible to the corporation. Generally, the "safe" limit is usually the current SSI maximum wage. Beyond that, the IRS is very likely to re-characterize wages paid to owners as dividends. While this actually results in a lower (direct) tax to the owner, it usually results in higher taxes to the corporation, plus penalties and back interest.
Note that this is generally true for LLCs, S-Corps, and C-Corps, though the precise rules differ based on the type of entity. You'll definitely want to talk to a lawyer or accountant.
A company that has $10MM in revenue, and $10MM in salary expense will pay zero corporate income tax.
Due to downvotes, I guess I better explain what I mean: Basically, EC2 provides instances where "if you restart your server you lose your data". You don't use those when that would be a problem for you, you use EBS backed instances which do not have this problem. Or you do it some other way. Point being, this is technically true but it's not really a problem in practice.
The double taxation reference refers to it being a somewhat common misconception among people that have taken a business class before that US corporations are "double taxed". IE, corporate profits are taxed, then your personal income is taxed. This is technically true but does not actually matter because you pay yourself a salary (which is taxed as income), but this is deducted as an expense from corporate income (thus not double taxed).
Point being--it's the same FUD.