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    4 Replies Latest reply on Aug 25, 2013 9:18 AM by Moderator Melinda

    Give my own S Corp a 1099

    letsalcido Wayfarer



      I started my own business last year and created an S Corp. Because of the need of a stable income I had to look for a job, which I just got, however it is an independent contractor position (although they pay is a base salary and I am required to work a 9-5 shift). What I am trying to do is avoid my employer/client having to write a check in my S Corp's name and rather give ME my 1099 at the end of the year, but for tax purposes I would be paying my own S Corp as if it was a sub-subcontractor and give it a 1099 (from me which would make my taxable income 0), and then run payroll and pay myself every month or every two weeks. I would like to avoid having to do estimated tax payments as much as possible as I also have other clients and run payroll anyways.


      I would highly appreciate it if anyone could help me with this.


      Thank you!

        • Re: Give my own S Corp a 1099
          Tran Nguyen Tracker

          Hi Letsalcido,


          As an accountant, I'm still a little hazy on what you are trying to accomplish -- beyond $0.00 income.


          Why are you not letting your employer pay your S-Corp if you are trying to avoid Self-Employment tax as a 1099 worker? An S-Corp is not subjected to self-employment taxes and if your employer pays it directly there, you would avoid having to move funds around/sub-contracting your S-Corp.


          Either way, it achieves the same end goal. If your employer pays your S-Corp then it is "Income". If you sub-contract your S-Corp it is still "Income". However, if you are planning on sub-contracting your own S-Corp, you run the risk of transparency.


          For example: If your employer/client denies that they have any knowledge of you sub-contracting, then all that fund will be re-calculated as "Self-Employment taxes" and you are in for a nasty audit. Another issue is, if they are unaware of you "Sub-Contracting" your S-Corp which could cost you your job not informing them. Finally, "Sub-Contracting" your own company could be seen as "Investing" and thus, causes income to become equity -- this can also spark a nasty audit.


          I'm sorry I don't have a more favorable answer for you. let me know if you have any further questions.


          Tran Nguyen


            • Re: Give my own S Corp a 1099
              letsalcido Wayfarer

              Hi Tran,


              Thank you for your answer.


              At the end I asked them to pay me through my company. I was a little afraid of doing so because my new "employer/client" is in the same industry and at the end, even though I was hired as an independent contractor he wants to keep the same benefits of having an employee, thus I am required to work from  9 - 5 and I'm paid a salary.


              Thank you for your answers, they are definitely new knowledge to me and that's appreciate it!

            • Re: Give my own S Corp a 1099
              hconnections Adventurer

              letsalcido one benefit to having an S Corp is that you can pay yourself as an employee, issue yourself a W-2 and avoid paying the higher Self Employment tax. The wages you pay yourself are tax deductible to the business.


              Just make sure you are properly withholding your federal, State, Social Security and Medicare taxes and paying them each quarter.


              So you can have your employer pay your S Corp (as you instructed them to) and pay yourself a Wage as an employee to your own Corp.


              Also, your employer really should be careful in mandating your work hours. IRS has guidelines on how companies can determine if people working for them are classified as employees or as independent contractors. These are the some of the business tax matters I discuss in my ebook "The Home Business and Small Business Tax Toolkit" available at

              • Re: Give my own S Corp a 1099

                Hi Letsalcido,


                When we first talked about starting our own business, the first step we were told is to get a good accountant. An accountant that would grow with our business. It was the best move we ever made. All of our tax questions have always been discussed with her since then. Tax laws change on a regular basis and sometimes can get very complicated. A good accountant can deduct their pay from your income tax returns every year.


                Good luck with your business.