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Started By
Message
Financial gurus....S Corp llc question
Posted on 2/17/15 at 9:58 am
Posted on 2/17/15 at 9:58 am
I have an llc I started in 2014. Has taken off and I had it changed to an S Corp as of Jan.
CPA told me to get an amount and pay myself a salary. This is NOT my main income source. So I'm can use the money in any way to avoid being taxed before I pay myself. I have a meeting with him later this week, but wanted ideas while I'm home doing very little on Mardi Gras.
Question, what are all the vehicles I can pay out of the company as "benefits" for me and family......health insurance, 401k, etc. basically money I can pull out and not get taxed while serving a strong (and legal) purpose.
even though it's a one member S Corp, do I need to put wording in the minutes that makes these costs legit. Health insurance is the biggest question. what are the rules needed to make it a "company employee benefit"
CPA told me to get an amount and pay myself a salary. This is NOT my main income source. So I'm can use the money in any way to avoid being taxed before I pay myself. I have a meeting with him later this week, but wanted ideas while I'm home doing very little on Mardi Gras.
Question, what are all the vehicles I can pay out of the company as "benefits" for me and family......health insurance, 401k, etc. basically money I can pull out and not get taxed while serving a strong (and legal) purpose.
even though it's a one member S Corp, do I need to put wording in the minutes that makes these costs legit. Health insurance is the biggest question. what are the rules needed to make it a "company employee benefit"
2
Posted on 2/17/15 at 10:23 am to GeeOH
first question, do you need the income? I would keep it as retained earnings and reinvest in your company to build more revenue. Dont take anything out you dont need.
Posted on 2/17/15 at 10:31 am to Lsujacket66
The problem is that with an S Corp if you leave earned income in the business you still have to pay taxes on it personally.
Posted on 2/17/15 at 10:31 am to GeeOH
Ask yourself what expenses are ordinary and necessary to carry on the business? Compensation of employees is generally considered ordinary and necessary, but it has to be reasonable compensation for the duties and responsibilities of the employees. That should allow health insurance benefits for employees, even if they are family members. The drawback is that you have to offer the same benefits to all eligible employees.
Vehicles are a trickier matter since they can be used for personal purposes as well as business purposes, and the personal use of vehicles by employees is not an ordinary and necessary expense.
Vehicles are a trickier matter since they can be used for personal purposes as well as business purposes, and the personal use of vehicles by employees is not an ordinary and necessary expense.
Posted on 2/17/15 at 10:52 am to Poodlebrain
Understood poodle....but I am the only employee. I have 40 plus reps around the country that are straight commission (1099) so benefits would not have to be offered to them.
Questions lean more to extra benefits I can pay pre-taxed to employees, which I am the only one and I am the owner as well.
Example, can I make health insurance a company benefit and switch my families health policy to a plan paid by the company? Or is there a requirement of there being more than one employee with the obamacare bs?
Company makes between $5k and $10k per month now after paying reps. So that's what I work with. Now I'm paying myself $4k out of it (I'll increase when volume supports it long term). So, I'm in a great position to make the company pay for things that we have to pay anyway....health insurance, retirement, etc.
As stated in here, I don't want a bunch of retained earnings at the end of the year that get taxed or I pay a "bonus" to myself which gets taxed as well.
Questions lean more to extra benefits I can pay pre-taxed to employees, which I am the only one and I am the owner as well.
Example, can I make health insurance a company benefit and switch my families health policy to a plan paid by the company? Or is there a requirement of there being more than one employee with the obamacare bs?
Company makes between $5k and $10k per month now after paying reps. So that's what I work with. Now I'm paying myself $4k out of it (I'll increase when volume supports it long term). So, I'm in a great position to make the company pay for things that we have to pay anyway....health insurance, retirement, etc.
As stated in here, I don't want a bunch of retained earnings at the end of the year that get taxed or I pay a "bonus" to myself which gets taxed as well.
Posted on 2/17/15 at 11:07 am to GeeOH
Special rules for benefits apply to shareholder/employees who own 2% or more of an S corp. For health insurance purposes, you will be treated as if you are self-employed for income tax purposes. There is nothing to prevent you from buying health insurance for your entire family through the company.
If you are making $5-$10K per month from an activity that is not your primary source of income, then you should have had this conversation with your CPA before you made the S Corp election. I'm not sure making the election was the right move.
If you are making $5-$10K per month from an activity that is not your primary source of income, then you should have had this conversation with your CPA before you made the S Corp election. I'm not sure making the election was the right move.
Posted on 2/17/15 at 11:34 am to Poodlebrain
So the health ins premium would be taxed as self employed income?
What about 401k investment out of the company?
Once it grows to a substantial sustainable situation, it would become my primary income. So I went S Corp to save the 15% by being on a salaried basis instead of all k1
What about 401k investment out of the company?
Once it grows to a substantial sustainable situation, it would become my primary income. So I went S Corp to save the 15% by being on a salaried basis instead of all k1
Posted on 2/17/15 at 11:47 am to GeeOH
quote:The 15% self-employment tax only applies up to the Social Security maximum, and I figured your primary source of income would cover the vast majority of that.
So I went S Corp to save the 15% by being on a salaried basis instead of all k1
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