I work lower paying side jobs and as such have been looking into setting up an S Corp for this work and having the S Corp collect the payment. Additionally, I have a high paying W2 employment that is paying into my pocket.

I would like to have the W2 employment partially pay the compensation (salary, bonus, and equity) into S corp so I can build it up faster, but as the money would be going into the S corp, I would like it to be taxed at the business rate as the money is not going into pocket.

Is this possible?

  • What does setting up the S Corp do for you? It will not be taxed at the "business rate" since the money just flows through to be personally taxable at your personal rate.
    – D Stanley
    Jul 5, 2018 at 19:56

1 Answer 1


It kind of depends on your employer, my guess is it's not going to be possible. Essentially you'd like your employer to hire your company as a contractor. The company you work for hires your S-Corp, not you, then your company has it's expenses and tax situation. At the end of the year you might receive a 1099 (though if your corp is hired a 1099 doesn't need to be sent) then you handle your expenses and tax situation on your own, the employer wouldn't withhold any taxes and you won't receive a W2.

Basically, there are specific criteria that defines an employee versus a contractor that revolve around time and manner of work. It's likely illegal for your employer to categorize you as a contractor as it probably supplies everything you need to do your job, tells you when you'll be working and tells you how to do the job. But it might be worth a conversation depending on the circumstances of each job.

  • 2
    This, and it's even less likely that it could be done "partially".
    – TTT
    Jul 5, 2018 at 19:49

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