Discussion:S Corp with Zero Wages
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Figuringitout (talk|edits) said: | 18 December 2005 |
| I am preparing to take on an S Corp with an owner who is employed by a company which he receives W2 wages. He owns a semi truck which is leased to this company and it issues 1099 income in the form of rents. These 1099 earnings are the S Corps revenue. My question is, should he be receiving a wage from the S corp in addition to his regular wage. He is being paid reasonable wages as a driver and therefore not avoiding payroll taxes, etc.
Thanks in advance! | |
| 18 December 2005 | |
| He has 2 jobs. Truck driver and an officer of a S corporation. He should receive a salary from the S corporation paying him an amount for the time he spends performing duties as an officer. | |
Figuringitout (talk|edits) said: | 18 December 2005 |
| Thanks for the quick response. In that case, wouldn't a positive point to this scenario be that both he and his company will be able to invest in one of the solo retirement plans and actually provide the company with another deduction, but help to build retirement? These plans require that contributions be from earnings from wages.
Can I reclassify distributions to the owner as wages and have him pay appropriate taxes or should he start 2006 drawing wages? Thanks again! | |
| 18 December 2005 | |
| I believe that you could actually set up a retirement plan yes and this would prove to be beneficial to your client. I also think that you can give him salary before year end and close off some of the distributions to salary and then he will be paying payroll taxes from both corporations. Some tax planning for next year could give him some positive benefits to the wages from both corporations I would think :) | |
Figuringitout (talk|edits) said: | 19 December 2005 |
| Yes, I have. I appreciate the helpful responses and have found this discussion forum a good source of info regarding other issues as well. I plan to visit often.
In determining which retirement plan might be suitable, I've examined the income deferral plans like Sep IRA or Solo 401K. There is also the new Roth 401K available in 2006 to consider. Any suggestions? I'll post as new topic as I am sure others are considering this option as well. Thank you | |
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