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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2309
Experience:  Certified Public Accountant
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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: 11 months ago.
Category: Tax
Expert:  Mark Taylor replied 11 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 11 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 11 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 11 months ago.

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