View Full Version : Corporations and taxes
tabat
11-18-2011, 12:01 PM
Hello and thanks in advance. My first post here :p
Quick questions about taxation:
I know about dividends and double taxations.
Now here's the questions:
I cannot be an employee of the corporation because I do not always perform duties during the normal daily operations (but sometimes do) and same goes for my wife.
Can we pay ourselves as consultants/contractors? If now how else?
Thank you, thank you, thank you !!!
You are both employees of the corporation, even if it's part-time.
jamesray50
11-19-2011, 10:30 AM
I agree with Evan. Owners of corporations need to pay themselves as employees.
glenneena
11-23-2011, 10:12 AM
If you take money from your company, you are an employee. If you are reimbursing yourself for cash laid out, than no.
If you take money from your company, you are an employee. If you are reimbursing yourself for cash laid out, than no.
Well, if you take money from your company, that is just larceny.
glenneena
11-23-2011, 07:23 PM
I do believe you can reimburse yourself for money you have spent in the due course of business. I have a third corporation that has no employees. If any work is done in the company, I do it. I do not take payroll and claim no employees when paperwork is due. There are no 941's being filed as well. If I pay for something from my pocket or another company, I am allowed to cut a check to reimburse that amount of money. Why is that larceny???????
I do believe you can reimburse yourself for money you have spent in the due course of business. I have a third corporation that has no employees. If any work is done in the company, I do it. I do not take payroll and claim no employees when paperwork is due. There are no 941's being filed as well. If I pay for something from my pocket or another company, I am allowed to cut a check to reimburse that amount of money. Why is that larceny???????
What is the third company doing? Other than reimbursing yourself, is the company profitable? What type of work are you performing for the business? However small, it is still work and one could argue that a salary would be required. For the work you do, would somebody else do it for free? If not, what would they be paid -- and that amount is presumably what you should be paying yourself. If the company has losses, one could argue that wages shouldn't be taken, but when the pendulum swings the other way you should.
The wording of your sentence, "taking money from your company" indicates larceny, not being an employee.
glenneena
11-26-2011, 09:20 PM
SO you are telling me that, if I paid out say $78.00 for office supplies, $44.00 for stamps at the post office and $30.00 to put a part on a truck owned by the company, if I wrote a check to myself for $152.00 for reimbursement, that is larceny? No matter if the company is profitable or not.
As far as I know, you can still elect to have employees or not. You are not compelled to take a salary.
SO you are telling me that, if I paid out say $78.00 for office supplies, $44.00 for stamps at the post office and $30.00 to put a part on a truck owned by the company, if I wrote a check to myself for $152.00 for reimbursement, that is larceny? No matter if the company is profitable or not.
This is reimbursement (the second part of your statement above). You stated that "if you take money from your company, you're an employee." All these examples you just provided are reimbursements, but could also meet the "criteria" you just described, and if that's the case -- you're an employee.
As far as I know, you can still elect to have employees or not. You are not compelled to take a salary.
This is news to me. Some businesses can generate revenues without any employees, but most can't. Corporations with NO salary that are profitable are viewed a bit more cautiously by the IRS. Also, if you declare a dividend (distribution), you are further opening yourself up to scrutiny.
glenneena
11-27-2011, 10:13 AM
I guess the problem with the internet is the written word without discussion. Anyways, when I said, "If you take money from your company your an employee", what I meant in more detail was, if you are taking money without it being a legit reimbursement, then you probably would have to declare those amounts as 'payroll' or some form of 'dividend distribution', etc.
As far as my situation I do have 2 corporations that are not my 'main' service/retail corp. So, one holds the real estate and pays whatever in corporation taxes but has no employees. When the real estate is ever sold, I would assume that is what will be taxed as capital gains for the profit, etc. The expenses match the profits. My other Corp., has trucks that are leased to my main Corp., and does not need employees. Whatever money I loan or buy things on behalf of the corporation, I get reimbursed for.
If you feel I am wrong, it's all good. IMHO, I have only paid money to Doctors, Lawyers and CPA's, and came to the qualified conclusion, if there is no problem, they all make less money---and they know it. P.S., I didn't say they were dishonest, just no problem, less money for them.
Your description sounds more like typical "holding" companies which don't really produce or do anything (other than "hold" property). As there probably are just losses in these companies, or no profits, you can probably get away without a "staff".
However, if your main business was a "retail" store, and you were the only person operating it but didn't pay yourself a salary, then you run into the problems I described. Essentially, if your corporation is earning revenues, the question becomes how are these being produced if you have no employees.
I'm assuming your doctor/lawyer/CPA reference to being "no problems" means that if there isn't anything else for them to do, they make "less money" in the sense there isn't anything else for them to do. For that, yes, I agree. But like a lot of things, a proper diagnosis requires understanding the entire case. What you described is a bit more reasonable in my mind.
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