SnowGirl 03:11 PM 06-24-2016
Hello -
I'm going to be getting a license sometime in the next year (I'm currently legally unlicensed) and wanted to restructure my taxing if it's possible.
I was looking into re-coding my business as an S-Corp instead of a Sole Proprietorship so that way I could do accounting quarterly and pay myself out of a business account and pay my employee taxes monthly instead of at the end-of-year taxes.
From looking at other threads here, an S-Corp is not necessarily the best route for small Family Child Care Homes...but is it still possible to put all the tuition into a business bank account and pay myself (and eventually an employee) monthly, and pay IRS monthly as well from that account? I don't know if this will make sense in reading...so just let me know if I need to clarify!
I was also thinking of getting an accountant to settle my books quarterly so I can make sure all my deductions are in line. I know a gal who will do this for a pretty good rate. Does that sound like overkill for this business? I basically want all my ducks to be in a row come tax season so that way it won't be nearly so painful as it was this year!!
TIA for any advice!
TomCopeland 07:52 AM 06-25-2016
Originally Posted by SnowGirl:
Hello -
I'm going to be getting a license sometime in the next year (I'm currently legally unlicensed) and wanted to restructure my taxing if it's possible.
I was looking into re-coding my business as an S-Corp instead of a Sole Proprietorship so that way I could do accounting quarterly and pay myself out of a business account and pay my employee taxes monthly instead of at the end-of-year taxes.
From looking at other threads here, an S-Corp is not necessarily the best route for small Family Child Care Homes...but is it still possible to put all the tuition into a business bank account and pay myself (and eventually an employee) monthly, and pay IRS monthly as well from that account? I don't know if this will make sense in reading...so just let me know if I need to clarify!
I was also thinking of getting an accountant to settle my books quarterly so I can make sure all my deductions are in line. I know a gal who will do this for a pretty good rate. Does that sound like overkill for this business? I basically want all my ducks to be in a row come tax season so that way it won't be nearly so painful as it was this year!!
TIA for any advice!
If you hire employees and pay more than $4,000 in wages in a year you must file quarterly payroll taxes, not at the end of the year and not monthly. Hiring an accountant to review your taxes quarterly is a good idea if you can afford it.
I don't recommend setting up an S Corporation because of the fees, extra record keeping and loss of some house deductions.
SnowGirl 07:58 AM 07-01-2016
Thank you, Tom.
Is it still possible to pay myself from a business account and pay the associated payroll taxes on a monthly basis instead of at the end of the year with an LLC?
TomCopeland 09:56 AM 07-01-2016
Originally Posted by SnowGirl:
Thank you, Tom.
Is it still possible to pay myself from a business account and pay the associated payroll taxes on a monthly basis instead of at the end of the year with an LLC?
There are several types of LLCs. If you set up a single person LLC, you file your taxes in the same way as if you were self employed. That is, you don't pay yourself and withhold payroll taxes on yourself. Instead, you pay Social Security/Medicare taxes and federal and state income taxes on your profit. You can pay these taxes quarterly using IRS Form 1040ES or your spouse can have enough withheld from his paycheck to cover your taxes.
If you set up a corporate LLC (S or C corporation) then the corporation would hire you as an employee and withhold Social Security/Medicare taxes as well as federal and state income taxes. These would be paid to the IRS quarterly. If these taxes (not counting state income taxes) are more than $2,500 in a quarter you must pay them in monthly.
Controlled Chaos 02:38 PM 07-01-2016
Originally Posted by TomCopeland:
There are several types of LLCs. If you set up a single person LLC, you file your taxes in the same way as if you were self employed. That is, you don't pay yourself and withhold payroll taxes on yourself. Instead, you pay Social Security/Medicare taxes and federal and state income taxes on your profit. You can pay these taxes quarterly using IRS Form 1040ES or your spouse can have enough withheld from his paycheck to cover your taxes.
If you set up a corporate LLC (S or C corporation) then the corporation would hire you as an employee and withhold Social Security/Medicare taxes as well as federal and state income taxes. These would be paid to the IRS quarterly. If these taxes (not counting state income taxes) are more than $2,500 in a quarter you must pay them in monthly.
This is what I do. I hired an accountant (way more affordable than I had thought)!