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Creating a small pet grooming business off our home (attached

Customer Question
garage being converted, construction underway...
Creating a small pet grooming business off our home (attached garage being converted, construction underway now) in Upstate New York (Chenango County).

It will only be myself doing most of the grooming and possibly my husband as occassional groomer/helper. Our objective is to keep this business just he and I no employees.

We have chosed to go with S-Corporation formation. To prevent having to pay all the taxes for having employees, is it best to list the S-Corporation as 100% in my name only or 51% myself, and 49% in my husband's name. (Husband/Wife are one shareholder, right?)
Help:-)
Submitted: 8 years ago.Category: Tax
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9/2/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello kitty,

When you say "to prevent having to pay taxes for having employees", exactly which taxes are you referring to?

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Customer reply replied 8 years ago
I'm sorry...........

For the way the IRS and State look at our company, will my husband and I be considered employees of the company being we are the only share-holders?? company having to pay out unemployment taxes, workers comp for us?

We have paid for everything out of our personal savings $34,000 ourselves to setup the business. We are going now to setup a business bank account to start paying anything further for the business only with the business account. How do we go about recouping our personal investment?
Tax Professional: Merlo, Accountant replied 8 years ago
Hello again kitty,

As far as unemployment insurance, that is something you will be required to pay even though there are actually no other employees other than yourself and your husband. In the state of NY, paying for workers compensation insurance for the owner of a company is optional. You do not have to pay for this coverage for your and/or your husband, but if something were to happen to either of you while working, you would have to rely on your own health insurance coverage.

Regarding the start up costs that you incurred to set up the business, in the first year that you actively open your doors for business, you may deduct up to $5,000 in start up costs. The remaining costs are then amortized over a period of 15 years. If you would sell your business or otherwise dispose of the business prior to the end of the 15 year period, then any remaining costs which you had not yet deducted would be deducted in your final year of operation.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you kitty.

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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