Listener Q&A with Mike: S-Corp Nuances, Home-Based Tax Strategies, Navigating Complex Deductions and More!

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Ever wondered how an S-Corp's retirement contributions differ from a sole proprietor's? Or why the salary of an S-Corp owner is under scrutiny by the IRS? 

Dive into today's episode as Mike answers the questions you submitted! We dive into the intricacies of S-Corp tax strategies, answer questions about ad spends and late S-Corp conversions, and delve into the practicality of hiring children in business. Plus, get tips on navigating errors in transactions and staying ahead with the latest in tax planning. 

[01:12] Insights on S-Corps, LLCs, and Retirement Planning

• As an S-Corp owner with a SIMPLE IRA and $200,000 income, is the 3% match on just the W2 or the total?
• As a sole proprietor, should I get an EIN to pay my 16-year-old for minimal work?
• As a multi-member LLC, can we claim our client's ad spend as an expense for tax categorization?
• Since it's already late in the year, can I still convert my LLC into an S Corp? Or is that an audit red flag?

[11:38] Tax Implications for Home-Based Work, S Corp Salaries, and Business Losses

• If I work partly from home and have an external business location, can adding a home addition be tax-deductible?
• What are the implications of not taking a reasonable S Corp salary and skipping payroll for two years?
• My business has lost money for the past three years, but things are looking to turn around this year. Can I use those prior losses, or are they gone?

[17:24] Questions on 1099 Mechanics, Hiring Minors, and Maximizing S Corp Deductions

• Is anyone knowledgeable about the 1099 for mechanics? I've received mixed information and am seeking clarity. Can it be done without complications?
• I run an S Corp landscaping business and want to hire my children, aged 8 and 10. How can I make sure I'm following all the proper procedures?
• A third-year California real estate agent operating as an S corp LLC expects $250k in commissions with $150k pass-through profit. How can they maximize deductions and reduce taxes?

[22:17] Navigating 1040 ES Payments and Initial Capital Contributions on 1120-S

• Someone with an LLC taxed as an S corp mistakenly paid 1040 ES taxes from their business account. Can this be categorized as an owner's draw?
• LLC (taxed as S-Corp). The owner paid $2500 to the business account on the first day. Where do I need to put this amount on the 1120-S?

[24:20] Final Thoughts

• The Time Is NOW To Start Paying Less In Taxes.  Join Our Tax Minimization Program Today!

Key Quotes

“When we look at retirement plans, look at two things. Who are we looking to take care of? And there can be multiple choices. Is it the business owner or is it their employees or both? And then what is the purpose of the plan?"– Mike Jesowshek, CPA

“Now is the opportunity if you have not started tax planning yet or if you have not completed the implementation of the tax strategies that we talk about every single week on the podcast here. Now is the time to take action." – Mike Jesowshek, CPA

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

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