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Any IT Consultant working as an S-Corp and not using a Tax professional? Preferably as a husband and wife team, but sole owner is fine.

Posted on 2014-01-27
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Last Modified: 2014-09-25
I would like to get some detailed information on how to setup and operate as an S-Corp, including how to handle payroll and tax issues. I would like to setup my own S-Corp and work CORP to CORP, and handle payroll and taxes myself. My wife will be doing all the paperwork, filing, finances, etc so it will be a 2 person corporation, I am thinking, 80/20% basis. These are just hypothetical #s. I would like to see if someone has similar experience and how they are managing it. Appreciate it.
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Question by:BadHatHarry
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John Hurst earned 500 total points
ID: 39812476
I work as a Corporation (but not an S-Corp). Both are incorporated but the S-Corp doles out all income to shareholders and does not pay tax.

So you need to incorporate. I used a lawyer to set up the corporation. Spouses work as one shareholder.

Check with an accountant, but the output is not just payroll, rather it is a distribution.

See this WikI article for some additional information.

http://en.wikipedia.org/wiki/S_corporation

I work as a regular corporation, have the corporation pay me and look after personal taxes myself. The corporation must file its own tax return.

I think that works better (at least for me) than passing all the income of the corporation to myself. I can do that via payroll if I wish.

... Thinkpads_User
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by:notacomputergeek
ID: 39813254
Why do you want to set up an S-Corp? If just to shield yourself from liability, an LLC will work fine and be less cost, less time to maintain, and possibly no separate tax return.

You can setup the LLC two ways: 1) as a sole-member (which would be just you) and business income/loss would be entered on your personal tax return, 2) multi-member LLC (you and your wife). The profit/loss would be determined for the company and then K-1s distributed, which are then entered on your personal tax return.

I have owned all three and see the value in each, but for a two person firm, try to keep it simple.

Many husband and wife businesses will also choose a multi-member LLC, since that's what insurance companies consider a "business" to sell you group coverage - it takes at least two owners. Doesn't matter if their married. The ACA threw a wrench in this, since there are no pre-existing conditions when seeking coverage. It's not as important as it used to be to jump from group to group coverage.
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by:John Hurst
ID: 39813383
A standard corporation also works very well. I have that myself. If costs a wee bit to set up but is more convenient to keep business affairs separate from personal.

I did not see any value in an S-Corp either.

.... Thinkpads_User
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by:John Hurst
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@BadHatHarry - Any update on this?
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