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    1 Reply Latest reply on Dec 21, 2017 6:55 PM by moderator_lisa

    Shareholder also providing separate services to my S-Corp. Pay as an IC or Employee?

    icsterps Newbie

      Hello,

       

      Thank you in advance for your help!  This year my business partner and I set up an S-Corp for providing language services (translation/interpreting).  In our experience prior to forming this corporation, we both worked as ICs for a number of referral agencies (s-corps and LLCs) who are responsible for receiving requests for language services and then contracting the work out to us (the service providers), filing via 1099s.  Now with our new corporation, we are faced with the dilemma of whether we should pay ourselves as ICs or employees.  The purpose and description of our corporation is a "referral agency," meaning our services focus on handling requests and finding contractors to fill them.  As a new agency, about 95% of the requests we receive are also being filled by us, the shareholders, but in a different capacity and role than what the agency is responsible for doing.  Given this structure (agency=referral, interpreter (us)=services) would we be eligible to pay issue payment for the services we provide as ICs, given the function and role of the agency and IC are different?  We may still have to issue ourselves a W2 for work done inside the office organizing the referrals, but issuing ourselves a larger 1099 than W2 would seem more advantageous economically- or am I mistaken?  We are young and new to the corporate tax world and greatly appreciate any advice you can share!

        • Re: Shareholder also providing separate services to my S-Corp. Pay as an IC or Employee?
          moderator_lisa Pioneer

          Welcome to the community, icsterps. It sounds like your business is thriving. Congratulations! I hope our members with experience in this aspect of running a business will chime in with advice and suggestions for you. Is your company working with an attorney and an accountant? Both entities would be able to work together to update your business plan to include this type of situation.

           

          While you're here, I hope you'll visit our other discussions, check out articles written by our small business experts, and join in any conversation you're interested in. You'll also want to familiarize yourself with our Community Guidelines to be sure your posts won't be removed for violations. We'd love to hear more about you and your company! You can share more information on Introduce Yourself.

           

          --Lisa