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I have a client who derives her income from services as a ...

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I have a client who...
I have a client who derives her income from services as a notary. In 2008, she incorporated. Previously when filing form 1040 with a Sch.C, she was exempt from self-employment tax because her services were solely that of a notary. Now that she has incorporated, and will be an employee of the new corp., will she now have to pay the SS & Medicare taxes? The fact that she incorporated is the only change in her situation.
Submitted: 10 years ago.Category: Tax
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Answered in 1 hour by:
1/2/2008
Tax Professional: Theresa Romaker, Tax Assistant replied 10 years ago
Theresa Romaker
Theresa Romaker, Tax Assistant
Category: Tax
Satisfied Customers: 877
Experience: Assist my husband in his accounting firm
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Hi Chris:

Has she taken any of her personal monies and put them into her business? If she has done this, then she has given the corporation a loan and she can pay these monies back to herself with interest.

On the other hand, if this isn't the situation, then she will be responsible for paying all taxes that are due on any of the monies that she pays herself from the corporation.

If I can be of assistance to you in the future, you may request my help by typing:

ATTN:Customerbefore typing your question on the header or subject line and submitting it!

Terri

 

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Customer reply replied 10 years ago
Reply to Theresa Romaker's Post: So, the answer to my payroll question in regard to notary services is that the wages are now taxable for SS & Medicare purposes; in contrast to being self employed for the SAME services which do not have any SECA tax.
Tax Professional: Theresa Romaker, Tax Assistant replied 10 years ago

Yes, you are correct. She would be better off to file a dissolution on the C Corporation and form an LLC. The laws for the two are very different. She could also file for an S Corporation but an LLC would give her the same advantages of an S Corporation without the responsibility of keeping minutes.

If I can be of assistance to you in the future, you may request my help by typing:

ATTN:Customerbefore typing your question on the header or subject line and submitting it!

Terri

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Customer reply replied 10 years ago
Reply to Theresa Romaker's Post: Still confused; the entity is a corp, electing S corp. status.
Tax Professional: Theresa Romaker, Tax Assistant replied 10 years ago

I apologize, I thought that you said that she had become a C Corporation. If she is S status she will be alright. On the other hand though if she were to disolve this and file as an LLC she would not have to keep minutes from meetings, etc.

Hope this help! Sorry for the confusion...My mind was the foggy one Smile

If I can be of assistance to you in the future, you may request my help by typing:

ATTN:Customerbefore typing your question on the header or subject line and submitting it!

Terri

 

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