110 votes
Accepted

The USA "self-employment tax dodge" mystery

You pretty much have it straight. In the first case, for 2017, She would have to pay 12.4% (social security) on 127,200 of salary and 2.9% (medicare) on the full amount. That would be $15,772, and $...
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  • 74.9k
33 votes

My business partner is unable to work; What should I do?

The best partnership agreements cover all contingencies often referred to as the 5 D's: death, divorce, drugs, disinterest, and disability. Most do not, however, which makes them such a mess. I was ...
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  • 74.9k
28 votes

My business partner is unable to work; What should I do?

Did he say why he wants double your asking price? Did you explain to him how you came up with the offer you made? Sometimes exploring interests (why people make their decisions) is more helpful than ...
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  • 23.8k
24 votes

My business partner is unable to work; What should I do?

Many partnership agreements include a shotgun clause: one person sets a price, the other can either buy at that price or sell at it. It's rather brutal. You can make offers that you know are less than ...
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  • 12.1k
18 votes
Accepted

Does paying down debt in an S Corp decrease profitability?

Someone else pointed out that this isn't how it works - paying down debt won't decrease profitability for tax purposes. "Someone else" is correct. Principal payments on debt are not tax ...
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  • 45.6k
15 votes

What is a reasonable salary for the owner and sole member of a small S-Corp?

The answer depends on this: If you had to hire someone to do what you are doing in the S-corp, what would you pay them? If you are doing semi-unskilled work part-time, then $20k might be reasonable. ...
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7 votes

The USA "self-employment tax dodge" mystery

On the surface I agree with the previous responses, however, since you are for tax purposes an employee, some states will require to you to carry workman's compensation insurance, and unemployment ...
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6 votes

What's the appropriate way to signify an S-Corp?

S-Corp is a corporation. I.e.: you add a "Inc." or "Corp." to the name or something of that kind. "S" denotes a specific tax treatment which may change during the lifetime of the corporation. It doesn'...
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  • 128k
5 votes

What's the appropriate way to signify an S-Corp?

Subchapter S Corporations are a special type of corporation; the difference is how they are taxed, not how they relate to their vendors or customers. As a result, they are named the same way as any ...
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5 votes
Accepted

What are the implications of lending money to my sole member S-corp?

You can make a capital contribution, not a loan. It's not a taxable event, no interest, and you can take a distribution later when the business has the money to pay you back. So yes, transfer the ...
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  • 23.8k
5 votes

LLC-SCorp to self - actually, does the corp pay payroll taxes?

In fact: does JoeCorp have to pay "payroll taxes" on that?? Yes. Any shareholder of an S-Corp with greater than 2% ownership must take reasonable compensation from the S-Corp as a W-2 employee, and ...
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  • 63.9k
5 votes

Adult Entertainment Taxes; Independent Contractor, SMLLC, LLC, S-corp, etc?

Being self employed is always a bit more complicated for loan underwriters because you don't have the proof of income from a third party, like a W2 and pay stubs from an employer. I've heard crazy ...
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  • 48.5k
5 votes
Accepted

What options are available if the IRS denies appeals for waiving missing form fee?

Disclaimer: I am not a lawyer. I am not an accountant. I am not even a U.S. citizen. This is not advice. Aside from doing nothing and having the IRS pursue further enforcement actions against you and ...
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  • 31.4k
5 votes

What options are available if the IRS denies appeals for waiving missing form fee?

The right way to handle this situation is, "You can't charge me penalties because I acted on the advice of my CPA". That is Mr. X's "get out of jail free" card. However, it sounds ...
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4 votes
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Why is K-1 business income taxed at 50%?

That's really not something that can be answered based on the information provided. There are a lot of factors involved: type of income, your wife's tax bracket, the split between Federal and State (...
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  • 128k
4 votes
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What's the difference between S-corp vs LLC file as S-corp?

The difference between the two is subtle, and it a complicated mix of corporate law and taxes. Company Types First, let's talk about a company without going into taxes at all. A company is ...
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4 votes
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Can you "expenses-in-a-corp V. standard deduction" in the USA?

Business expenses (deductions) offset business income, so no matter which type of pass-through business entity she is using (Sole proprietorship,LLC,S-Corp,Partnership), the expenses will offset her ...
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  • 63.9k
4 votes

What are the advantages of LLC over S-Corp?

Short Answer I saw a video that mentioned that if you don't want to withdraw all your company's net profit and want to invest it again on the company, it's better to have a LLC over the S-corp. Is ...
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  • 363
4 votes

End of year Tax for S-Corp holding January payroll

You should really talk to your accountant. It's not clear what you're describing, you're talking about invoices and payroll in the same sentence, but they're not the same. If you get an invoice, it ...
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  • 128k
3 votes
Accepted

Can I write off time spent learning my trade - Two-Man S-Corp

I'm not sure what you mean by "writing off your time," but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job,...
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3 votes
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Found Mistake on 2013 1120S Form

"I don't know if it's common or necessary to include capital stock as a liability?" Yes, if you look at the title of the nonasset part of the balance sheet it actually is titled "Liabilities and ...
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3 votes

What is a reasonable salary for the owner and sole member of a small S-Corp?

Generally if you're a sole S-Corp employee - it is hard to explain how the S-Corp earned more money than your work is worth. So it is reasonable that all the S-Corp profits would be pouring into your ...
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  • 128k
3 votes
Accepted

Health insurance deduction - better to buy through S-Corp or individually?

I ran this through my accountant and it's the same whether you do it through your company or as an individual. The only difference is the line number where it occurs.
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3 votes

LLC-SCorp to self - actually, does the corp pay payroll taxes?

As a 1099 contractor, the employee pays both halves of his FICA/social Security/Medicare tax (7.65% per half). As employee of his own S-corp, C-corp or LLC, the employee pays half and the employer ...
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3 votes
Accepted

Reducing tax obligation for LLC electing S-corp taxation

First off, let's correct or clarify some of your assumptions about S-Corp taxation. Note these are basic simplifications and do take into consideration the various tweaks due to tax laws or income ...
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  • 45.6k
3 votes
Accepted

Can an S-Corp pay the sole owner/employee with a 1099?

No. S-Corp owners should be paid W2 wages and distributions. Here's a pretty good explanation as to why you can't use a 1099. Some notable quotes from the article: IRS FS-2008-25 states that ...
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  • 45.6k

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