do you guys do your own payroll, or do you have a payroll service?

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ChrisS said:
Anyone have more info on this? This would save me a lot of trouble if true.
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In the past 12 years I've had 4 CPA's, 5 lawyers, and several other professionals go through all of our finances for the businesses we've owned, which included 2 LLC's and 2 S-Corps.

Out of all of the stuff they examined this was perhaps the ONLY thing they all agreed on. And the CPA's said they'd refuse to sign our tax returns if we ever tried this.

You can not do this. If for some reason you are unsure check with a CPA. They'll agree with me.
 


Sharksfan said:
On top of that if you are doing ANY work for the corporation it is expected (legally) by the IRS that you will be paid a salary by the corporation as a W2 employee. The salary must match (roughly) what you would pay on the open market for a full-time employee of the same experience, geography, and skill set.
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so whats considered a reasonable salary for what we do?
I can live on 2k a month and want to just reinvest the rest into my business, so can i just do a payroll once a month for 2k?
I consider myself to be lazy, and if i was an employer i wouldnt pay myself more than 22k a year ;)
 
From my understanding it's ok to write yourself checks and claim them as dividends, that way you can lessen the amount of Self-employment tax you have to pay (which is around 16%).
 
gdubs12345 said:
so whats considered a reasonable salary for what we do?
I can live on 2k a month and want to just reinvest the rest into my business, so can i just do a payroll once a month for 2k?
I consider myself to be lazy, and if i was an employer i wouldnt pay myself more than 22k a year ;)
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What do you actually do? Probably marketing ad copy, graphic design, write code/HTML, etc. What would it cost to hire someone to replace you if you were incapacitated in your geographic region?

That's the question the IRS will ask. The CPA's job is to help you answer it. Get one.
 
PurePursuit said:
From my understanding it's ok to write yourself checks and claim them as dividends, that way you can lessen the amount of Self-employment tax you have to pay (which is around 16%).
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This is absolutely acceptable with an LLC and an S-Corp assuming you have a W-2 salary.

However, in an S-Corp you also have to have basis - meaning your invested capital must outweigh the cash you've taken out. Invested captial is equal to what you have put in + profits - whatever is taken out.

If you have negative basis you can take cash out but you can not claim it as a dividend. In that case it's classified differently depending on a LOT of complex rules.
 
There's no reason you can't do your own PR. Here's a basic program that will cost per year what you're paying the service per pay period.

Medlin Software - Download and Install

The QTD and YTD info can be printed and taken to your accountant if you don't want to get into preparing the quarterlies.

If you do decide to take a stab at it and have any questions after you've d/l the program, shoot me a PM and I'll walk you through it.
 
I use quickbooks online, both for books & payroll. Pretty happy with it as it's zero brain damage and it notifies me when specific docs need to be filed with fed & state. It's also one less thing for me to have to keep backed up.

As for owner draws, dividends, distributions, etc. The best answer is to consult with a few reputable *business* CPAs (not your cousin who helps you with your 1040). Seriously, do it. It will cost a few bucks, but it's money well spent. The IRS will not be very understanding if you tell them you followed corp and tax advise from a forum. What works best for someone else isn't always what's best for you, especially when you factor in variables such as corp structure, what state you're incorporated in, number of employees, stock holders, accounting methods, etc. Once you're talking bigger $ amounts, the IRS will forever be in your shit if you fuck things up and they take notice.

Just my $0.02. Individual results may vary.
 
You should go CPA all the way - do an initial consultation and then every time your situation changs (have a kid, etc) meet up with them again. There's lot of stuff you can do that benefits you like hiring family members. I grabbed this quick off a tax website:

For family members under age 18, you don't have to withhold for FICA, Medicare, FUTA and SUTA. If your spouse is employed, you don't have to withhold for FUTA and SUTA, but must withhold for FICA and Medicare.
 
Sharksfan said:
I want to be very clear on this - what you are doing is considered tax evasion. I'm not going to tell you what to do but I sure would NOT post about it on a public forum. If you are doing this you can be sent to prison for it.
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Taking an owner's draw is not tax evasion. I'm speaking from an LLC standpoint, but I would imagine it would be the same for an S-Corp. You are just required to claim any owner's draw's as income on your personal taxes at the end of the year. If you do - that's not evasion, and perfectly legal.
 
Sharksfan said:
THIS IS VERY, VERY, VERY WRONG.

I want to be very clear on this - what you are doing is considered tax evasion. I'm not going to tell you what to do but I sure would NOT post about it on a public forum. If you are doing this you can be sent to prison for it.
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Say what? Owner's draws and dividends are taxable income, so how is this tax evasion? I pay quarterly taxes on this, as it is income. And yes, this is all CPA approved.
 
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