Corp-to-corp vs 1099

[cutecat]

What is the name of your state (only U.S. law)? VA

I own a small S-corp and am working through it at a client site corp-to-corp. I'm the only employee of my company. They pay my company and I pay myself through the company. I have the following expenses:

Monthly Gross Wages 8340.00
Fed Tax 1725.03
FICA 517.08
Medicare 120.93
VA Tax 443.72

Employer FICA 517.08
Employer Medicare 120.93

Monthly Federal Deposit 3001.05
Monthly VA Deposit 443.72

Tax preparer expenses to file forms/etc: about $1500 per year
Year-end Business taxes preparation: $400
Year-end Personal taxes preparation: $200

I have a feeling I am over-spending on my small company on taxes/fees/etc with just myself for no real benefit. How much can I save overall if I start working on a 1099 independent contractor basis? Which expenses can I knock off?

Please advise...

TIA

 

[tranquility]

The main tax advantage of an S-corp for the owner tends to be the amount above the reasonable compensation for what you do. You pay yourself and then pay the taxes on the profit above that amount without self-employment taxes. Other than that, you're doing it for protection from liability. (Maybe a lesser risk of audit.)

 

[LdiJ]

What is the name of your state (only U.S. law)? VA

I own a small S-corp and am working through it at a client site corp-to-corp. I'm the only employee of my company. They pay my company and I pay myself through the company. I have the following expenses:

Monthly Gross Wages 8340.00
Fed Tax 1725.03
FICA 517.08
Medicare 120.93
VA Tax 443.72

Employer FICA 517.08
Employer Medicare 120.93

Monthly Federal Deposit 3001.05
Monthly VA Deposit 443.72

Tax preparer expenses to file forms/etc: about $1500 per year
Year-end Business taxes preparation: $400
Year-end Personal taxes preparation: $200

I have a feeling I am over-spending on my small company on taxes/fees/etc with just myself for no real benefit. How much can I save overall if I start working on a 1099 independent contractor basis? Which expenses can I knock off?

Please advise...

TIA

You cannot pay yourself as a 1099 independent contractor if you are working for your S-corp. You must treat yourself as an employee. If you are talking about abandoning the S-corp then you would not be able to deduct any more expenses than you are deducting now, and you would subject all of your profits to self employment tax.

If its really costing you 1500.00 to file your quarterly payroll tax forms then you might want to consider using a payroll service instead of how you are doing it now, because that is a bit expensive.

 

[cutecat]

You cannot pay yourself as a 1099 independent contractor if you are working for your S-corp. You must treat yourself as an employee. If you are talking about abandoning the S-corp then you would not be able to deduct any more expenses than you are deducting now, and you would subject all of your profits to self employment tax.

If its really costing you 1500.00 to file your quarterly payroll tax forms then you might want to consider using a payroll service instead of how you are doing it now, because that is a bit expensive.

Yes, I meant not working through my company but as a 1099 contractor directly with the client.

Last year, the company made 109K and I paid myself 100K as reasonable salary for a programmer. Does it offer any advantage for the difference of taxes on 9K? Will it cost me more if I go 1099?

I was charged $750 for a 6-month period last year for filing statutory forms, etc and guess it would cross $1500 this year.

I would be going fulltime with the client sometime this year.

TIA

 

[LdiJ]

Yes, I meant not working through my company but as a 1099 contractor directly with the client.

Last year, the company made 109K and I paid myself 100K as reasonable salary for a programmer. Does it offer any advantage for the difference of taxes on 9K? Will it cost me more if I go 1099?

I was charged $750 for a 6-month period last year for filing statutory forms, etc and guess it would cross $1500 this year.

I would be going fulltime with the client sometime this year.

TIA

Yes, you saved about 1400.00 in federal taxes on that 9k, that you would have had to pay if you were treated as a sole proprietor.

 

[tranquility]

Yes, I meant not working through my company but as a 1099 contractor directly with the client.

Last year, the company made 109K and I paid myself 100K as reasonable salary for a programmer. Does it offer any advantage for the difference of taxes on 9K? Will it cost me more if I go 1099?

I was charged $750 for a 6-month period last year for filing statutory forms, etc and guess it would cross $1500 this year.

I would be going fulltime with the client sometime this year.

TIA

Hint: You want to pay yourself the lowest "reasonable" salary. That is what saves you the most in taxes. The term reasonable is used by the government to prevent people from paying themselves nothing or very little and gaining a huge tax advantage.