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A financial planner get paid personally. He deposits it into

A financial planner get paid...
A financial planner get paid personally. He deposits it into her personal account and then moves it to his llc which is taxed as an S...won't he get double taxed? Shouldn't he be able to deposit that into his company directly -- maybe a company with his name and then a dba? Is that how it should be done...What about the 1099?
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Answered in 16 minutes by:
8/15/2012
Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
Experience: CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.
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Chea Romine :

This is a very common issue in the industry. We will file a Schedule C listing the 1099 amount as income, then under other expenses we create an expense category called Income reported on LLC return ( EIN XX-XXXXXX) and list the same amount. That way the 1099 is reported and if the IRS looks at the return they see where you reported the income. The Schedule C will net to 0 so you won't be double taxed. We have done this for years for many financial planners and have never had an issue.

Depositing in the individual account and then transferring is how you should do it. We always recommend to our clients to always transfer the whole amount so it is always a clean in and out.

The SEC is the reason it must be in an individual's name so you won't have any luck getting it issued in a business name.

Customer:

Could he create a company with his name XXXXX XXXXX, Inc dba The Best Financial Planner and deposit into that account since it is in his name? Then he would not have to transfer it? Would that be a good way to eliminate that step?

Customer:

I can pay you for another answer...how do i do that?

Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
Experience: CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.
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The problem with that solution is you will need to create John Smith, Inc which will cost you money and will need to get an EIN. No bank will open a bank account without the IRS incorporation papers so it will be more hassle than it is worth. The banks have gotten very particular about these things.
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Chea Romine
Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
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Experience: CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.

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