Assignment of commissions

[WiscBroker]

Find a new accountant. This is largely an accepted practice and I agree with ATMs comments.

Once you hit the SS max, there is no reason to not utilize an s corp if available to you.

Fair enough. I submitted the change request to the IRS for S-Corp election and I was approved. HOWEVER, now I am wondering if I made a mistake because all of my commissions are paid to my SSN and I receive a ton of 1099-NECs every year which will be treated as self-employment income. So how do you guys get around the 1099 issue?

 

[rousemark]

Fair enough. I submitted the change request to the IRS for S-Corp election and I was approved. HOWEVER, now I am wondering if I made a mistake because all of my commissions are paid to my SSN and I receive a ton of 1099-NECs every year which will be treated as self-employment income. So how do you guys get around the 1099 issue?

Assign the commissions to the corp?

 

[somarco]

wondering if I made a mistake

What does your accountant say?

If you are not using a competent an accountant, fire him/her and get a better one. DIY accounting to save a few $$ rarely works out in your favor.

 

[Tahoe Ray]

Fair enough. I submitted the change request to the IRS for S-Corp election and I was approved. HOWEVER, now I am wondering if I made a mistake because all of my commissions are paid to my SSN and I receive a ton of 1099-NECs every year which will be treated as self-employment income. So how do you guys get around the 1099 issue?

For years my accountant made those adjustments for me. I frankly don't know how he rectified everything but I use a bookkeeper for monthly P&L and I would just send him everything at the beginning of the year (1099s, my monthly books, etc.)

He's the CPA, not me.

I now assign all commissions to my agency/entity.

Assign the commissions to the corp?

That's the way I do it but it's not cheap b/c many carriers require your corp to also be licensed to do that.

 

[jdeasy]

For years my accountant made those adjustments for me. I frankly don't know how he rectified everything but I use a bookkeeper for monthly P&L and I would just send him everything at the beginning of the year (1099s, my monthly books, etc.)

He's the CPA, not me.

I now assign all commissions to my agency/entity.



That's the way I do it but it's not cheap b/c many carriers require your corp to also be licensed to do that.

They certainly don’t make it easy. I wish I had learned that lesson early on.

Better late than never though.

 

[DonP]

For many yrs I’ve had substantial partnership write offs from another business . There was no real reason to to have a llc/sub chapter s Corp . After this yr write offs gone . I’m looking at doing for next yr . It’s just a pain to change 34 contracts to llcs(6-8 I’m no longer an active agent but get renewals ) to be paid . Also lic with each state as a corporation .Max ss is paid on $160 k or so . So let’s say an agent nets $320k . The no ss on 1/2 your income no benefit as 50% of your income is $160k . You’ll still pay for full ss then . But max dividend rate is 20% . So on the dividend of $160k( 1/2 your $320 total net ) you save around $20 k of federal taxes . What’s the cost to do a personal income tax return and a s corp return ?

 

[Tahoe Ray]

you save around $20 k of federal taxes . What’s the cost to do a personal income tax return and a s corp return ?

Is this a question or a rhetorical statement?

It's less than 10k including the monthly books.

 

[DonP]

Is this a question or a rhetorical statement?

It's less than 10k including the monthly books.

$10k cpa fees? Lol . What monthly books ? I don’t have any employees or tons of others entry’s . I give my accountant my summarized expense sheet at yr end and he fills it in on the return . I just need a cpa to put the #’s on my return and file it.

 

[Tahoe Ray]

$10k cpa fees? Lol . What monthly books ? I don’t have any employees or tons of others entry’s . I give my accountant my summarized expense sheet at yr end and he fills it in on the return . I just need a cpa to put the #’s on my return and file it.

I just meant it's a lot less than 20k in savings.

Shouldn't be more than a couple grand w/o payroll and a bunch of other crap. I thought you were weighing whether it would cost more or less going LLC/S.

For you it's a no brainer, even with the aggravation of the licensing/updating carriers.