How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1282
Experience:  Certified Public Accountant
93680669
Type Your Tax Question Here...
Mark Taylor is online now
A new question is answered every 9 seconds

To brief... I have S corp, nature of business is software

Customer Question

Hello,to brief...
I have S corp, nature of business is software consultancy started in 2014
2 Directors ( myself and my wife)
No business , No employees since inception.
No revenue so far , $0 tax filing done promptly using CPA.
Since Oct 2016, I am working for 2 contract jobs using Corp2corp (w9).
My question is :
Should I enroll as employee ?
if so since what date i should.
and What establishes me as a employee with my own company?
Can the 2nd director ie my wife can work as employee too? and what is the procedure?
what all necessary things should be taken care to comply according to labor laws , tax laws etc.
If I do not want to be employee, and no expenses are incurred , what should I do with the income in company's account by the end of FY, can I carry forward to next year?
Submitted: 2 months ago.
Category: Tax
Expert:  Mark Taylor replied 2 months ago.

Hi, my name is Mark. I will be happy to help you with your questions. As a S-Corporation you are required to pay the officers a reasonable salary. This will be based on the earning of the corporation. If the S-Corporation has taxable earnings for 2016 you would want to pay yourself a salary. This can be done anytime before the end of the year.

Customer: replied 2 months ago.
Mark, Thank for the answer, Would you mind answering
1) how to figure the salary amount for the officer by the end of the year,
2) What kind of reinvestment, for ex. buying a real estate can reduce the income passed over to owners ?
Expert:  Mark Taylor replied 2 months ago.

Buying real estate is not a good instant deduction. You would not want to buy real estate within a Corporation. A good entity to buy Real Estate is a LLC.

1. A reasonable salary would be based on the amount of taxable income generated by the S-Corporation. If the S-Corporation made $50,000 then you would want wages of $30,000 to $40,000. If you generated taxable income of $500,000 you would want to make sure that you had wages up to the FICA limit of $118,500.

Expert:  Mark Taylor replied 2 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.