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TheNewGuy
10-28-2009, 08:25 PM
so I have a new business as an S-Corp. I'm taking about 50% of my total income as salary right now. I'm a little confused as to the best routes to get the rest out as the minimal tax hits etc.

- I currently don't take any expenses on mileage or business phone calls etc but do track it.

- I was doing a distribution every quarter. Is it better to do one lump one at the end or beginning of the year?

- is there anything else I'm missing?

Evan
10-28-2009, 11:10 PM
There really is no one "fits all" solution to tax planning. A lot of factors are important, such as the type of business, your annual revenues, your age and future goals. Maybe the corporation will start offering you benefits. The good news is that there are plenty out there which may entitle the corporation to a deduction and they are NOT required to be included in your W2.

I won't say that a 50/50 ratio for salary/distribution is beneficial. It depends on what your intent is, and a variety of factors.

Do you have a CPA? I suggest working with one to see what benefits you might be entitled to and should take advantage of. If (s)he hasn't offered this advice, maybe now you can inquire about these.

huggytree
10-29-2009, 07:53 PM
I pay myself my monthly wage as if i was a regular worker and take all my profit out at the end of the year.

keeping track of your expenses is extremely important...get quickbooks and do it weekly

i get $10k out of my business tax free from milage
mine and the wifes cell phone,internet and phone service are all paid by the business.

my accountant tells me how to do everything...i suggest you sit down with yours...

there really isnt any good ways to save taxes from what ive found...just alot of little things which adds up

TheNewGuy
10-29-2009, 10:09 PM
yeah I am going to sit down with the CPA, I was just curious what others were doing so I had a decent understanding rather than taking the CPAs word as gospel :)

I guess I should look into doing more with the expenses. I keep track of my mileage and business usage of my personal cell phone but I don't think the internet one would work for me (I have office space). Thanks!

Evan
10-29-2009, 10:34 PM
mine and the wifes cell phone,internet and phone service are all paid by the business.

my accountant tells me how to do everything...i suggest you sit down with yours...

That can be quite an aggressive strategy, as it seems like the accountant is trying to make some of your personal expenses part of the business. This is fine and dandy until you're audited.

Then you will have the burden to show that you and your wife use the cell phones 100% for business. Oh, it's not 100%? Then you start to lose what you claimed there. Ditto with internet, phone service, electricity, etc.

He may only legitimately take a portion of it, but if he is claiming 100% and is aware that these aren't all business-related, you could have a cell mate. And sue him for malpractice.

TheNewGuy
11-02-2009, 06:20 PM
That can be quite an aggressive strategy, as it seems like the accountant is trying to make some of your personal expenses part of the business. This is fine and dandy until you're audited.

Then you will have the burden to show that you and your wife use the cell phones 100% for business. Oh, it's not 100%? Then you start to lose what you claimed there. Ditto with internet, phone service, electricity, etc.

He may only legitimately take a portion of it, but if he is claiming 100% and is aware that these aren't all business-related, you could have a cell mate. And sue him for malpractice.


right now I'm just looking at my monthly bill and taking the business call minutes as a % of the total and applying that to the bill to keep track. There's nothing wrong with doing it that way right?

Evan
11-02-2009, 09:18 PM
That is the acceptable method.

If you feel after awhile that that the percentage is fairly consistent, you can use that amount.

handprop
11-11-2009, 05:04 PM
If you want to learn about how not to pay taxes get in contact with a farmer, they are masters of the art.:D

Mike

huggytree
11-14-2009, 04:58 PM
me and my wife use our cell phones mostly for business...mine is probably 98% and the wifes is probably 75%....she barely uses hers....

i think its pretty anal to be fussy over a few bucks a month......i know soooo many businessmen who write me business checks for personal things...i cant imagine the IRS cares about $10 in revenue loss or whatever it may come to..

who has time to add up all their cell phone calls and turn it into a % every month to save $5???? i have hundreds of calls

Evan
11-14-2009, 11:14 PM
If you know your wife is only about 75% business, then why not just have the company pay 75% of it, and not 100%? You're the one who runs the risk if audited.

Writing a business check for a personal thing doesn't explain how they classify it on their books. If they were a sole proprietor, maybe they classify it as a draw.