- 15,041
Not too familiar with how to calculate it, are you? And its 15.3%.
Signing Up with an FMO As an Individual or in My Company Name
- Thread starter apollo23
- Start date
Not too familiar with how to calculate it, are you? And its 15.3%.
- 11,997
Talking out of my caboose?
1st-1099's sent to an individual are kept and reported to the IRS, S-corps/C-corps/LLC's 1099's are sent to the IRS and immediatley destroyed.
2nd-Individual 1099 are immediatley considered earned income, were corp 1099s are considered business income and are subject to tax credits and deductions.
3rd-You will pay less tax as a corp.
4th-I apologize for calling anyone a moron, maybe just ignorant of the advantages of being a sub-s corp.
5th-if your accountant hasnt suggested that you file for sub s corp., then you need a new accountant.
6th-proof (shove this up your caboose!);
Saving Business Taxes with an S Corporation: A Short Primer
S corporations, or Subchapter S corporations, produce several tax benefits as compared to sole proprietorships, partnerships, and C corporations.
The big benefit--and the one that people usually talk about--is the payroll tax savings. To understand how this works, let me compare two alternatives: A sole proprietor making $90,000 a year and an S Corporation making $90,000 a year.
Of course, the taxes that a sole proprietor pays depends on his or her filing status, itemized deductions and family size, but typically such a person might pay about $12,000 in federal income taxes. The person might also pay another chunk in state income taxes.
In addition to these income taxes, the proprietor also pays a 15.3% self-employment tax on the $90,000 of business profits. Roughly, this self-employment tax (which is equivalent to Social security and Medicare tax) equals $13,000.
Things usually work differently for the S corporation, however. To make calculations easy, assume the S corporation is owned by a single shareholder. In this case, the S corporation must break the $90,000 of profit into two buckets: wages and the leftover (which is called a distributive share). If the wages equal $40,000 and the leftover distributive share equals $50,000, the business pays Social Security and Medicare taxes (equivalent to self-employment tax) equal to roughly $6,000.
In this case, even though the two businesses make the exact same amount of money, the S corporation pays roughly $7,000 less in tax each year.
By the way, in addition to the big benefit of self-employment tax reduction, S Corporations also provide two other useful benefits--benefits which are a little more difficult to quantify but still important nonetheless.
One such benefit is that S corporation losses (such as those that often occur in the early startup years) can be used as tax deductions on the shareholders personal income tax returns.
Another such benefit is that the S corporation isn't taxed on S corporation profits--at least by the federal government.
Low-cost do-it-yourself S corporation kits
1st-1099's sent to an individual are kept and reported to the IRS, S-corps/C-corps/LLC's 1099's are sent to the IRS and immediatley destroyed.
2nd-Individual 1099 are immediatley considered earned income, were corp 1099s are considered business income and are subject to tax credits and deductions.
3rd-You will pay less tax as a corp.
4th-I apologize for calling anyone a moron, maybe just ignorant of the advantages of being a sub-s corp.
5th-if your accountant hasnt suggested that you file for sub s corp., then you need a new accountant.
6th-proof (shove this up your caboose!);
Saving Business Taxes with an S Corporation: A Short Primer
S corporations, or Subchapter S corporations, produce several tax benefits as compared to sole proprietorships, partnerships, and C corporations.
The big benefit--and the one that people usually talk about--is the payroll tax savings. To understand how this works, let me compare two alternatives: A sole proprietor making $90,000 a year and an S Corporation making $90,000 a year.
Of course, the taxes that a sole proprietor pays depends on his or her filing status, itemized deductions and family size, but typically such a person might pay about $12,000 in federal income taxes. The person might also pay another chunk in state income taxes.
In addition to these income taxes, the proprietor also pays a 15.3% self-employment tax on the $90,000 of business profits. Roughly, this self-employment tax (which is equivalent to Social security and Medicare tax) equals $13,000.
Things usually work differently for the S corporation, however. To make calculations easy, assume the S corporation is owned by a single shareholder. In this case, the S corporation must break the $90,000 of profit into two buckets: wages and the leftover (which is called a distributive share). If the wages equal $40,000 and the leftover distributive share equals $50,000, the business pays Social Security and Medicare taxes (equivalent to self-employment tax) equal to roughly $6,000.
In this case, even though the two businesses make the exact same amount of money, the S corporation pays roughly $7,000 less in tax each year.
By the way, in addition to the big benefit of self-employment tax reduction, S Corporations also provide two other useful benefits--benefits which are a little more difficult to quantify but still important nonetheless.
One such benefit is that S corporation losses (such as those that often occur in the early startup years) can be used as tax deductions on the shareholders personal income tax returns.
Another such benefit is that the S corporation isn't taxed on S corporation profits--at least by the federal government.
Low-cost do-it-yourself S corporation kits
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- 15,041
I suggest you do more research. The IRS is out for S Corps engaged in this behavior. If you really think the IRS is going to let an insurance agent be the sole employee of a S Corp and declare half the commissions as profit, you're kidding yourself.
There have been previous threads on this as well.
There have been previous threads on this as well.
- 7,790
WTF is a penality?
Furthermore, as Vol asked what is this 20% you referred to. I am asking these questions in behalf of all the morons on this board, great exalted one!
Also, how did you become privy to the internal operations of the IRS? I suggest you stick to insurance and avoid giving tax advice (or as many forum members like to say "advise" [sic])
BTW where did you get that information that those copies of the 1099's are immediately destroyed? The IRS use those in a document matching program.
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- 11,997
Apology.
New insult.
Just for grins and giggles, let's all go back to the original point. In most states, if not all, you can't have commissions paid to an agency if the agency itself is not licensed. To take that a step further, if you are going to have Medicare Advantage as a part of your book and you want to make sure the renewals can be paid in the event of your passing away then by having the agency licensed you can keep having the agency renew the appointment and maintain the renewals as long as the agency license stays active. I'm not sure how important succession planning is to you or if Medicare Advantage is a part of your book of business, that would make a lot of sense.
New insult.
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Just for grins and giggles, let's all go back to the original point. In most states, if not all, you can't have commissions paid to an agency if the agency itself is not licensed. To take that a step further, if you are going to have Medicare Advantage as a part of your book and you want to make sure the renewals can be paid in the event of your passing away then by having the agency licensed you can keep having the agency renew the appointment and maintain the renewals as long as the agency license stays active. I'm not sure how important succession planning is to you or if Medicare Advantage is a part of your book of business, that would make a lot of sense.
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- 1,271
A quick question - the carrier pays to your individual TIN (SSN). Your corp has its own corporate TIN. How do you prove to IRS that your income is the corporate income. (I'm seriously considering a corp but without having it licensed as an agency). I have had different advice on this and was wondering how you would handle it.
- 11,997
I would get the agency licensed. One way you could do it, but I would consult a tax attorney first, would be to 1099 the corporation all of the money. For example, my wife works for an organization and when the employees there get consulting work they give the money to the organization and they just draw their salary. The IRS might see that for as transparent as it is if you do that, even if it was within the letter of the law. It may just be easier to have everything paid to the agency. If you're married and want to be able to pass this agency on to your wife or if you have kids and you want to make it a smooth transition, getting the agency licensed makes a LOT of sense.
BS! There is no vendetta in the IRS for sole employee of a SCorp. My info is correct, but I am not stupid enough to say exactly how I know this.
I provided proof above if you will read it. The same person making 90K would pay less if they were a S Corp. If you enjoy paying more in taxes, knock yourselves out.
What business' have you been envolved in. I've been self employed all of my life. I pay a lot of money to my tax attorney/accountant.
Just like any (*&^ head can act like an expert, all along insulting anyone who disagrees with them. Now an intelligent person would investigate and find the facts.
As far as the 20%, it was changed in 2010, I was unaware of this, as I filed for an extention. I am corrected!
Using the word "penality" may have caused some confusion, that is what the accountants I use or have used call it.
My biggest problem is that you early posters came accross as experts in answering the OP's question, when you actually have don't have a clue. If you can't actually help the OP, keep your smartass mouth shut.
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You can't, that is the problem. I cannot deposit any checks that would be made out to me (if I had any), into my corporate account. As a corp, you can take additional deductions, just get a corp. check card and use it for all company expenses. Great way of keeping a record. I highly recommend that you find an expensive corp. tax attorney, make an appointment, and ask the questions.
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WTF is a penality?
I answered this one above. Are you speaking IN behalf of all morons or ON behalf? So are you the appointed chief moron?
Also, how did you become privy to the internal operations of the IRS? I suggest you stick to insurance and avoid giving tax advice (or as many forum members like to say "advise" [sic])
I couldn't care any less on your suggestions. I didn't ask for it either.
BTW where did you get that information that those copies of the 1099's are immediately destroyed? The IRS use those in a document matching program.
I answered this above also, I will not answer how I know this. The IRS does document matching for indviduals, not corporations. FACT!
Elder is out of this thread.
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- 15,041
What proof? A link to a site that wants to sell me a do it yourself S Corp kit?
To some businesses, there definitely are advantages to being a S Corp versus a sole prop. Professional services isn't one of them. Its too easy for the IRS to disallow your dividends/profits and recharacterize them as wages. There is no difference in an agent being an S Corp versus a sole prop, so why should there suddenly be a profit versus wages? Now if you had employees, or were running a manufactoring or retail storefront, it would be different.
But good luck to you when your number is finally up.
To some businesses, there definitely are advantages to being a S Corp versus a sole prop. Professional services isn't one of them. Its too easy for the IRS to disallow your dividends/profits and recharacterize them as wages. There is no difference in an agent being an S Corp versus a sole prop, so why should there suddenly be a profit versus wages? Now if you had employees, or were running a manufactoring or retail storefront, it would be different.
But good luck to you when your number is finally up.
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