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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Hello, Just started a C Corporation, it is in the finance

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Hello,

Just started a C Corporation, it is in the finance business working as a commercial loan consultant linking potential businesses with investors for various financing products. We will guide them through the application process. As payment, I would get paid certain points per approved loan trans actions. In order to get paid for this work, I need to fill out broker and consultant agreements.

Now, as part of the application, obviously I have to fill out my company information...I do have an EIN number , etc...... They lenders have provided me with a W-9 form. For me, since I formed the company, I will put everything under the companies name.....However, my partner has been trained as well and will work this part of the business as well.

So two questions:

When filling out the W-9 I know I will need to fill out corporate info.....However, my partner will be working with me and when she makes transactions, they will go under the corp as well...So , do I just pay her from the money brought into the corp or does she need to do a separate W-9

Or

When we close deals, they go to the corp and then I just pay her from those,,,,she would then claim separate taxes>

Lev :

Hi and welcome to our site!
Your assumption is correct. The C-corporation is a separate entity - and when the C-corporation pays someone for services - there will be appropriate paperwork and reporting.
If your partner and you personally work as employees of the C-corporation - each of you will be paid wages.
Form W9 is not required - but you may prepare this form and keep it for each employee. However - that is not required.
When is required - when C-corporation pays wages to yourself or to other employees - such wages are subject of employment tax - and in January - the C-corporation will issue W2 form to each employee - which each employee will use to prepare his/her individual tax return.

Lev :

On the corporate tax return -wages paid to employees will be deductible expenses - thus will reduce net taxable income of the C-corporation.

Customer:

Ok, so from a financially strategic approach would you recommend that my broker agreements with the lender go straight to the Coroporation and I then pay my partners and myself, then when I bring in independent contractors, I have them to fill out a w-9? However......for an example,,,,,,the lender would pay me $200....I pay the contractor 100 or half....the contractor would then be responsible for the taxes?....If so, how do I claim this payment on the corporate taxes?

Lev :

By signing form W9 - the person certifies his/her tax identification (social security number or tax ID) and that he/she is not subject of backup withholding. So - that is a good practice to need a signed W9 form for each employee and each independent contractor to whom your C-corporation makes payments.
That is a standard way to obtain tax information of payees. However if your C-corporation have all information needed to report such payments W9 forms are not required.

Customer:

So, for my partner she would just fill out a W2 both State and Fed, I would calculated the estimated tax withholding and then write a payroll check? then the Independent contractor would do w-9 and would be responsible for reporting as I would report payments to the IRS on that independent contractor?

Lev :

Again - as long as you have all information required for reporting - such as the name, address, tax ID - the form W9 is not required.
If your C-corporation pays to the contractor - not an employee - that compensation might need to be reported if the compensation for services will be more than $600 per year - such compensation must be reported to that independent contractor and to the IRS on form 1099misc - http://www.irs.gov/pub/irs-pdf/f1099msc.pdf‎

Lev :

You need to be clear that a worker is independent contractor and NOT an employee. That is because there are different reporting and withholding requirements for employees.

Customer:

Ok, so when I hire someone as an employee , would they fill out the state and fed w2?

Lev :

Let's be clear - not you - but your C-corporation which is a separate entity - hires either an employee or an independent contractor.
In case of an employee - the corporation pays wages - which are reported on W2 form. There is only ONE W2 which is used to federal and state reporting.
In case of an independent contractor - the corporation pays compensation - which is reported on form 1099MISC (if compensation is above $600).

The recipient will file his/her tax return - and will report all types of income regardless if such income is reported to the IRS or not.

Customer:

Thank, You very much......got it

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