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The landscaper
04-01-2006, 03:42 PM
I was talking to my accountant today and he was telling me that I could set up my company as a LLC, taxed like a S corp. Then he said I could get around self employment taxes by just taking draws on from the company. He also told me I could pay an employee and give him a 1099. How does this sound.

6'7 330
04-01-2006, 03:55 PM
I do believe it time for you to consider a new CPA.If you take your present one's advise, you might be landscaping the prison yard.

The landscaper
04-01-2006, 04:01 PM
What parts of it or both?

JB1
04-01-2006, 04:04 PM
The part about setting it up like a llc or S corp is right the restI'd be very scared ABOUT.

6'7 330
04-01-2006, 04:11 PM
What parts of it or both?

Zero self employment taxes and 1099ING employees.

The landscaper
04-01-2006, 04:15 PM
Can you get around "some" self employment taxes?

The landscaper
04-01-2006, 04:17 PM
Why would he tell me something like that, is there maybe tax benefits there?

lawnservice
04-01-2006, 10:55 PM
Why would he tell me something like that, is there maybe tax benefits there?
accountants are like landscapers....some know what they're doing...some dont

Daily Lawn/Landscape
04-01-2006, 11:06 PM
Get a Second opinion!:usflag:

The landscaper
04-04-2006, 09:49 AM
kinda scary how someone could be so far off.

jsf343
04-04-2006, 12:45 PM
Which set up minimizes self employment taxes the most in your opinions?
or is there a way to minimize? I am sole right now but am looking to do something this summer. My cpa recommended s-corp for various reasons but I don't recall her talking about the self e. tax much.

The landscaper
04-04-2006, 06:09 PM
With the S corp, there is a way to give distributions at the end of the year that are not hit with the self employment tax.

eshreve1234
04-04-2006, 06:51 PM
I am an S corp. You can only take distributions to the effect you have positive capital. Also, the IRS is really hot on Scorp audits right now. They got 16 million from congress to better enforce the tax code. They want the employment tax money.

You can take distributions that are not excessive, as long as you take wages that are in-line with what a normal person would take. Wages of 50k, distributions of 5k should be ok. Wages of 5k distributions of 50k, not ok.

There are not many safe/good ways to avoid paying employment/SE taxes.

As for your 1099 employees, that won't fly at all. If you tell them when/where they have to show up, they fail the subcontractor test. The only grey thing you could do is if you have high turnover, and they never reach $600, then its not reportable earnings.

Its easier and cheaper in the long run to just play by the rules.

jsf343
04-04-2006, 06:57 PM
I agree with the playing by the rules statement. Who wants to look over your shoulder all the time?! btw, where did you get the figure of 16 million for more audits? I wonder which way receives the least amount of attention from audits, Any ideas?

The landscaper
04-04-2006, 09:49 PM
I talked with another CPA tonight. She told me if you are not netting over 90,000, you are better off being taxed as a sole prop or partnership to avoid payroll taxes.

Eclipse
04-04-2006, 10:15 PM
I talked with another CPA tonight. She told me if you are not netting over 90,000, you are better off being taxed as a sole prop or partnership to avoid payroll taxes.

LLC's can be taxed the same as a sole prop.

trackgimp
04-04-2006, 11:00 PM
Don't discount that there are some good liability benefits to having an LLC or a corporation. As long as you watch your p's and q's (I strongly suggest having a lawyer draft your documents and set up something with them to submit your minutes, filings with the state, etc), you can help protect your assets just in case something happens :waving:

6'7 330
04-04-2006, 11:29 PM
to avoid payroll taxes.

Are you saying, a CPA informed you payroll taxes on an employee, can be avoided ?

The landscaper
04-05-2006, 12:32 PM
Oh definately, I will be setting up as a LLC. What I meant by that post was set up as a LLC I can should just be taxed like a sole prop or partnership.

6'7
NO, just for myself. Employees are different ballgame.

Evergreenpros
04-08-2006, 08:03 PM
Well he's right in a sense. You can set up a llc and just sub out all the work to yourself and others. Then it wouldn't be up to the llc to pay the self employment taxes, it would be up to the subcontractor and you. There is no way around paying FICA/self employment taxes if you want to operate legally.

Evergreenpros
04-08-2006, 08:05 PM
Many times it's easier and just as safe to have a sole prop and a good insurance policy.