Owning a business and the IRS.

[Proserpina]

Because if my business goes under I'll still be able to pay my bills with what's in my business accounts, as long as I'm managing my money well and not taking more than $1,000 a month for myself.

And THAT is your problem.

 

[OHRoadwarrior]

Because if my business goes under I'll still be able to pay my bills with what's in my business accounts, as long as I'm managing my money well and not taking more than $1,000 a month for myself.

Bingo!!! We have a fraudster!!!

 

[mndjrm]

You do have to be really careful with this one. As most of the others say, you start making over $1000 on a monthly basis and you would be fraudulent. This doesn't mean you can't start working it just means you really have to plan and probably seek help from an Attorney and/or a CPA

 

[FlyingRon]

There are a number of resources tests on SSI. I do not see how you are going to legally structure this fraud. Even if you don't take any money from the business and it sits in a corporate account, your shares of that company will certainly be worth something at that point and come under SSA scrutiny.

Frankly, with a disability determination, nothing prevents you from making money. Your benefits are just reduced (perhaps to nothing) while you have income as you are no longer eligible (not because you're no longer "disabled" but because you are not of "limited" income).

As pointed out it is outright fraud to hide income to take a government benefit targeted at those with limited income.

 

[justalayman]

Because if my business goes under I'll still be able to pay my bills with what's in my business accounts, as long as I'm managing my money well and not taking more than $1,000 a month for myself.

You apparently have no idea how a c corp operates. What you suggest would not be possible in a c corp. Heck, it wouldn't be possible in an s corp.

 

[LdiJ]

I am allowed to earn $1,000 a month in addition to the SS benefits I receive. Since working part-time at Walmart is beyond my ability, I want to start a home-based business to earn that $1,000 a month. The reason I am doing this is just to pay all my bills, not to defraud the government. I was under the impression that even a DBA was a legal business entity and as long as I only pay myself $1,000 a month, any other earnings would not be considered unreported income. I asked my question in the first place to see if my business were to make $1,100 a month and I only pay myself $1,000 and leave the extra $100 in my business' account as company money, will I lose my benefits?

You are incorrect. The income from Sole Proprietorships (what I think you mean by a DBA), LLC's that operate as Sole Proprietorships, Partnerships or S-Corps all flow through to your personal return and are indentified as your personal income, even if you only pay yourself $1000.00 a month.

The income from a C-corp does not flow through to your personal return, therefore the only income reported to you would be wages or dividends, and you do not have to issue dividends. However, if the C-corp has losses, they don't flow through to you personal return, and if they have profits above your wages, and then you would have a valuable asset that also might effect your SS benefits, and money just sitting there that you could not tap, and that might be taxed at a much higher rate than your individual rate. On top of that, when you finally realized it was foolish not to take the money, you would then have to pay tax on it again.

So, all in all, if you want to avoid making more than 12k a year, you would simply not do enough work to net more than 12k a year...rather than trying to structure things so that your income appeared to be no more than 12k a year.

 

[GTC1187]

Well, the way I see it, I can incorporate as a C-Corp and as the founder immediately grant myself 100% of the shares after formation for $0.00001 per share. At this Point we are talking about Nonstatutory stock options that have no readily determinable fair market value because they are not actively being traded. Given the situation is like this to the IRS, no taxable event has occurred.

Thanks,
Grant

 

[GTC1187]

Because a corporation is legally considered to be a person albeit not a natural person, and as this is how the government considers the situation to be, both parties(myself and my corporation) will pay an income tax. As the Corp pays it's income tax and I pay income tax on the salary I pay myself, there is absolutely no fraudulent activity occurring here legally.

 

[justalayman]

and so, how do you think you can grab the money in the corporate accounts?

A corporation is a legal entity. Stealing from the corporation is a crime. If the corp goes belly up, the assets would required to be used to pay the debts. Then, as sole shareholder, you would be entitled to anything remaining but it would be both taxable income and income calculated for SSA purposes.

On top of that, any profits the company makes would be taxable. On top of that, there are requirements to operating a corporation that cost money. Then, who is going to be the other officers of the corp that could also be subject to investigation when it is discovered this is simply a shell corp intended to hide income.

 

[FlyingRon]

Well, the way I see it, I can incorporate as a C-Corp and as the founder immediately grant myself 100% of the shares after formation for $0.00001 per share. At this Point we are talking about Nonstatutory stock options that have no readily determinable fair market value because they are not actively being traded. Given the situation is like this to the IRS, no taxable event has occurred.

Thanks,
Grant

It matters NOT what you grant yourself the shares for. The fact that the you are the sole shareholder of a company with banked assets is going to make you fail the means test. As pointed out, the only way you can get through this subterfuge is to use a C corp (an LLC or S corp will have to pass through the income to you). The taxation of that is going to be staggering. Frankly, I think you'll find if you make money , you'd be better off in the long run financially to just have it paid to you as a sole proprietor. Your SSI is going to be reduced (eliminated) either way by law. Nothing stops you if the business goes sour to live off the savings and go back on SSI when you once again meets the limited resources test.

 

[OHRoadwarrior]

Then you must report the ownership of the corp as an asset. Again committing fraud if you do not.

 

[GTC1187]

I don't see why the government knowing about this would be a problem. The Corp has no real assets or value at founding so I will pay very little in taxes after granting myself the shares.
I have an assistant that will be helping me in my home based business.

 

[OHRoadwarrior]

I don't see why the government knowing about this would be a problem. The Corp has no real assets or value at founding so I will pay very little in taxes after granting myself the shares.
I have an assistant that will be helping me in my home based business.

You can keep trying to find ways to commit fraud undetected. That does not change it from being fraud. Continue to lie, until you are caught. Then remember I told you that.

 

[justalayman]

I don't see why the government knowing about this would be a problem. The Corp has no real assets or value at founding so I will pay very little in taxes after granting myself the shares.
.

the profits (you know, the money you are talking about setting in the corps bank accounts) are taxable. Then, as the company grows in value, your interest represented by the shares will increase. That means your assets subject to review increase.

 

[GTC1187]

The shares have to have a determinable value to increase my assets significantly. Without them being actively traded they are taken at par value, which I will set at $0.0001, as standard practice. The total value of my founder's 8,000,000 shares is $800. If the government wants to tax me on my $800 worth of assets, I'm fine with that.
Are you familiar with LBO's at all?

Thanks,
Grant