I own an S-corp and pay myself as an employee. Do quarterly tax payments cover both company & individual taxes?

Question

I own an S-corp and pay myself as an employee. Do quarterly tax payments cover both company & individual taxes?

Answer 1

Your quarterly payroll returns cover the payroll taxes and the taxes that were withheld from your wages.



Depending upon the amount of income that your business generates you may also need to make quarterly estimated tax payments using Form 1040-ES. Ideally your pay within the S-Corp will result in little additional income at the end of the year that you'll have to pay income taxes on. That income will flow to Schedule E of your individual 1040 return via a Schedule K-1 from the S-Corp.



If your dividend income is excessive, the IRS may balk at allowing you to pay taxes on it as dividends and may require you to pay self-employment taxes on the excess. Your salary within the S-Corp should reasonably compensate you for the work that you do, including bonuses for significant income the same as any corporate officer would be compensated.

Answer 2

Two entities.



S-corp pays it's payroll taxes using form 941 and sends the money in under the EIN and that deposit schedule. I highly recommend you don't screw up the withholding.



You as owner have a 1040 and pay your estimated taxes under your SSN with form 1040-ES. Your estimated taxes need to include the income tax on both your wages *and* any additional income the S corp generates. If you flunk the 3 safe harbors for estimated taxes, the fact that the distribution came from the S-corp will not prevent you from paying an estimated tax penalty.

Answer 3

i could advise which you hit upon a clean, smart accountant. At your earnings point, a C-Corp could make plenty extra experience. you will pay much less entire tax and you'd be able to ward off the hit on FICA/Med taxes that an S-Corp payroll audit will very almost actually sting you for. to your man or woman good, even in a C-Corp, you ought to pay your self a minimum of the FICA salary cap with the intention to maximise your wages down the line whilst it's time to report for SS advantages, the two once you retire or ought to you strengthen into disabled. despite in case you get by utilising with the $60k, you're capturing your self interior the foot on SS advantages that are based upon your lifetime earned earnings.

Answer 4

It doesn't matter that much, since your business obviously isn't very important to you. You won't be in business long.



When you leave crucial components of your business in the hands of people who don't have a clue what they're doing, there's only one way to go, and that's down.



You've left your business and personal tax situation in the hands of a person who is clueless about tax law (you).



"This looks easy, I'll do it myself," is the refrain of countless people who went into business, formed a corporation without understanding the first thing about it, and watched their companies go down the toilet.



Unless you get smart real quick and get help from someone who knows what they're doing, you might as well get set for big losses rather than how you're going to pay tax on your profit.

Answer 5

As an S corporation there are no "company" taxes. At the end of the year the S corp will give you a K-1 form which you will use to fill out your Schedule E on your individual tax return. Therefore if you are paying the quarterly tax payments (I'm assuming these aren't 941, ESC, or other payroll related taxes) as an estimate of your end of the year taxes then yes you won't need to pay any additional estimates for the S-corp.



Edit: To be clear I was stating that she would only have to make one quarterly payment to cover both the S-corp distributions and individual income and not, as my negative votes would indicate, stating she didn't have to pay estimated tax on S-corp distributions. I assumed that the estimates were completed competently.

Answer 6

I would strongly suggest to you that before you go too far with this matter that you really should seek out some good face to face professional assistance such as an enrolled agent or a very good CPA that specializes iin this type of business operation that you are now in and try and pay attention and understand what this is all about at this time in your life.

Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act) and federal income tax withholding under the Internal Revenue Code. When corporate officers perform services for the corporation, and receive or are entitled to receive payments, their compensation is generally considered wages. Subchapter S corporations should treat payments for services to officers as wages and not as distributions of cash and property or loans to shareholders.

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates.



The Internal Revenue Code establishes that any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes. S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages.



This fact sheet clarifies information that small business taxpayers should understand regarding the tax law for corporate officers who perform services.

Who’s an employee of the corporation?

The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation, state "Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation."

The amount of the compensation will never exceed the amount received by the shareholder either directly or indirectly. However, if cash or property or the right to receive cash and property did go the shareholder, a salary amount must be determined and the level of salary must be reasonable and appropriate.

There are no specific guidelines for reasonable compensation in the Code or the Regulations. The various courts that have ruled on this issue have based their determinations on the facts and circumstances of each case.

Hope that you find the above enclosed information useful. 08/27/2011

Answer 7

If you are incorporated, the corporation and you are two entirely separate tax entities.

Answer 8

since you want to learn about what your CPA is doing for you, by all means wait until Mon and ask her, and in fact, ask her to direct you how to do it in case it would be necessary for you to do so

if your corp is issuing you a W-2 at year's end that will be reported on your own 1040, the corps files a 1120 form and pays its own taxes