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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16559
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Im a financial advisor and my broker dealer pays me all my

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I'm a financial advisor and my broker dealer pays me all my commissions and fees throughout the year. My broker dealer will provide me with a 1099 at the end of the year. So of course, they do not do any tax withholdings for me. It's up to me to take care of my own quarterly tax payments. So I’ve set up an S-Corp. I pay myself a salary and withhold the appropriate taxes, on which I file on a quarterly basis with the Fed and State.
I’ve also been told that I have to have the commissions and Fees dropped into my personal bank account and not my S-Corp bank account due to FINRA regulations. That any securities commissions have to be paid to an individual not an entity.
I have set up and use Quicken to track my personal finances and Quickbooks to track my S-corp finances.
It is real easy with Quicken to track the commissions and fees as are deposited into my personal account. I then enter those deposits as accounts receivable chart of accounts entry then transfer those funds into my S-Corp account.
With Quickbooks, I then create an invoice for each deposit into my personal account using my Broker-dealer as the customer and receive the payment as an account receivable chart of accounts entry.
My question has two parts
1) Is that the correct way handling the commissions and fees using Quicken and Quickbooks? Or is there a better way.
2) How is 1099 income treated at tax at the end of the year and filing income taxes and what do I have to do so the commissions and fees pass through to the S-Corp so it is not double counted as income to myself?

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

First off, your Quicken/Quickbooks method is a good way to track these expenses

MyVirtualCPA :

Second, your 1099 income received to yourself is considered self employment income. To avoid having to pay employment taxes on the entire amount that you receive (your entire net income, that is) you would need to issue a 1099 to the S-Corporation for the amount that you paid them

MyVirtualCPA :

SO essentially you are paying yourself, and shifting the tax reporting from you as an individual to your S Corporation.

MyVirtualCPA :

If you are audited, then you simply show where you transferred the funds, issued the 1099 and paid the tax as an S Corporation

MyVirtualCPA :

Issuing the 1099 to your S Corporation is key, because it shows as a legitimate expense to your schedule C (which will have a net income of 0) and then show income to your S Corporation

MyVirtualCPA :

Is there anything else that I can assist you with today? If not please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today.

MyVirtualCPA :

Also I would seek legal counsel to determine if this treatment violates any securities laws.

MyVirtualCPA :

Hope this helps

MyVirtualCPA :

Please let me know if you need anything else in this matter.

Customer:

To follow up, and make sure I have this correct-I would be the payer, to my S-Crop as the payee, and which box would I put the

Customer:

dollar amount in Box 3 as Other income or Box 7 as Nonemployee compensation?

MyVirtualCPA : Box 7 non employee compensation. But, ask your attorney first to ensure this arrangement doesn't violate securities laws
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