is there an accountant in the house?
so... I created an S-corp this year for the blog and I am attempting to pay taxes. I am going insane. Turbotax is telling me that I owe *zero* on my revenue despite not paying any estimated taxes this year, which is obviously not right.
I have always relied upon the kindness of strangers... anyone out there who can help me? Please email: [email protected].
February 17th, 2010 at 1:28 AM ^
I just texted my buddy and fellow MGoReader who is a CPA at Deloitte. 2 degrees from M and he's Swedish, doesn't get any better than that.
February 17th, 2010 at 1:32 AM ^
"...she's Swedish"
BOOM
February 17th, 2010 at 1:35 AM ^
There was a non-scientific study that places Swedes as the 5th hottest people as voted by travelers. Americans somehow beat out Brazil.
TOP 20 BEST LOOKING NATIONS 1. America 2. Brazil 3. Italy 4. Australia 5. Sweden 6. England 7. Spain 8. India 9. France 10. Canada 11. Mexico 12. Portugal 13. Wales 14. Russia 15. Japan 16. Ireland 17. Argentina 18. Netherlands 19. Scotland 20. GermanyBut in all seriousness, someone help Brian out. Swede or not.
February 17th, 2010 at 1:47 AM ^
But I think we all know that smart women =! hot women.
February 17th, 2010 at 4:30 AM ^
This is the most messed up list i have ever seen. Some of those countrys shouldnt even be on a list of top 30 let alone top 10.
February 17th, 2010 at 7:51 AM ^
What, you've never lusted over a Welsh hottie?
February 17th, 2010 at 11:27 AM ^
I did stipulate it was an unscientific poll for a reason.
I don't buy American over Bunda.
February 17th, 2010 at 8:24 PM ^
I think you have stumbled upon a great Mgotopic
February 17th, 2010 at 7:39 AM ^
That list is BS... I don't see Texas or "The South" on that list.
February 17th, 2010 at 9:03 AM ^
Any list missing it (without it in the top 5) has failed.
February 17th, 2010 at 9:06 AM ^
I'd love to see a revised list that replaces "Best Looking Nations" with "Hotties". That way all the metro-sexual men and pretty-boys can be removed and we can distill this list to the true criteria of being female and sexy.
February 17th, 2010 at 11:52 AM ^
no Cambodia? Diddy will disagree.
February 17th, 2010 at 10:03 AM ^
is where the ladies are smoking
February 17th, 2010 at 1:35 AM ^
...and she has a tramp stamp that says S.L.U.T.
February 17th, 2010 at 1:43 AM ^
My best advice:
Hire a legit professional. That way you won't have to worry about it, but you will pay for it.
February 17th, 2010 at 2:03 AM ^
When I was a freelance writer, I used Turbo Tax, but decided to fork a few hundred bucks over to my CPA friend. He saved me probably $3,000 that first year that I would have missed otherwise. Obviously, this was the friend discount, but I never have done my taxes again.
February 17th, 2010 at 1:46 AM ^
If there is a legit accountant that uses mgoblog they should do it for free. We should all be donating money to Brian. It sure beats paying monthly fees to rivals or scout.
February 17th, 2010 at 9:01 AM ^
Can we consider Brian a non-profit (based on above, no rev & no tax)? That way we can deduct our donations to him on Turbo Tax? (kidding!)
February 17th, 2010 at 8:32 PM ^
+1 again my main man.
February 17th, 2010 at 2:21 AM ^
you are going to want to try to zero out the income so that it doesn't pay taxes. Definitely time for an accountant!
February 17th, 2010 at 2:44 AM ^
Shouldn't this be labeled OT?
/s
February 17th, 2010 at 8:04 AM ^
It deals with Brian not getting thrown into a Federal ["Family Values"] me in the ["Family Values"] prison, which is definitely relevant to the this blog.
February 17th, 2010 at 8:51 AM ^
+1 for the Office Space reference.
February 17th, 2010 at 4:01 AM ^
Maybe it's because you actually didn't have any revenue from this blogging thing. Your feelings of insanity stem from the inner knowledge that you should have listened to your Mom and gotten a real job in engineering.
February 17th, 2010 at 7:20 AM ^
I'm a CPA in Illinois. If you have access to the email addresses of the users then you can email me your questions.
February 17th, 2010 at 8:00 AM ^
If TurboTax can screw things up for people like Tim Geithner, then don't worry about it!
Brian, you can just tell the IRS that it was the software's fault in 10 years when they finally figure it out and pay the fine then as the undisputed and supreme overlord of the internet*
*Or the Michigan blogosphere... Either one really...
February 17th, 2010 at 9:21 AM ^
Do you have any profit?
February 17th, 2010 at 9:39 AM ^
S-Corps do not require corporate level taxes. Instead, the taxes are passed through to the owner(s) of the company. This is similar to the popular LLC. S-Corps are becoming rarer because the LLC offers better protection and access to foreign investors. I doubt though that MGoBlog is picking up any foreign investment money anytime soon, though :-)
BTW, I'm an MBA, not an accountant, but this is a pretty standard question.
February 17th, 2010 at 9:45 AM ^
If anyone answers Brian's question in C++ code he will have a massive e-orgasm.
February 17th, 2010 at 9:45 AM ^
Why did you set it up as an S corp instead of an LLC? One of the few advantages to an S corp is that you will only be subject to self-employment tax on Company income to the extent that such earnings are characterized as compensation for services rendered.
Are you working on an 1120-S? Federal tax applies only at the shareholder level for S corps. Perhaps this is causing part of the issue?
February 17th, 2010 at 9:54 AM ^
And the IRS is requiring more and more that you characterize a reasonable amount of the income as compensation and pay self-employment tax. This keeps you from getting tax free dividends of a gazillion dollars, if you're someone like Tiger Woods, while only earning a salary of $1.
February 17th, 2010 at 10:00 AM ^
An S-corp doesn't seem like it would be very beneficial in Brian's case. I would think an LLC would serve him better.
February 17th, 2010 at 10:05 AM ^
I think Brian could prove that blogger's don't make much in wages and pass it all through and pay himself a distribution. Remember it is all what you can prove to the IRS. If he just pays himself to pay the rent for his mom's basement then he should be covered.
February 17th, 2010 at 1:54 PM ^
I'd also like to add that the main problem with Brian forming an LLC is that a one member LLC is a diregarded entity for income tax purposes and flows through directly to the individuals schedule C. Therefore, he wouldn't have any membership basis to take distributions all willy nilly. He would have to pay additional expenses to lower his businesses income ( a lot like farmers due). And like already stated he would get hit with SE tax.
February 17th, 2010 at 9:55 AM ^
Definitely hire a professional. I'm a CPA (although I don't specialize in tax) and I hired someone to prepare my taxes for the last 5 years and have easily saved at least $25,000 over that time. It's not expensive to hire someone good, my guy charges me $440. Make sure he has plenty of experience in handling small business, S-Corp, LLC's and the like and make sure he keeps up with the ever changing tax laws. This will be the best money you ever spent.
February 17th, 2010 at 10:02 AM ^
You can get by for a while doing it yourself, but eventually you will save yourself a ton of money hiring someone. I participate in management of a small investment fund, and just that is a pain in the ass to do by yourself.
February 17th, 2010 at 10:14 AM ^
Very rarely will there ever be an amount due on an 1120-S. You will pay the tax on your personal return when you input your K-1. But, definitely hire an accountant. I am a CPA, and I was not even comfortable with the bookkeeping and tax prep. on an S-Corp until my third year in the biz.
February 17th, 2010 at 11:11 AM ^
I thought with S-Corps that the income or loss that flows through to the shareholders only altered their basis and was not actually taxable income and that was one of the advantages over an LLC? In other words, taxable income isn't realized until shares are disposed of or a distribution is made in excess of AAA? I guess anything reported as a salary would have current tax consequences. I work in international taxes so don't see S-Corps that much.
[Edit: Nope, I am wrong. What is the benefit between an S-Corp and an LLC then?]
February 17th, 2010 at 11:18 AM ^
The income is taxable. You can withdraw funds from the business tax-free as long as you have sufficient basis, but you pay the tax on the income of the S-Corp on your personal return. The primary advantage of the S-Corp, as mentioned earlier, is the ability to avoid self-employment taxes on a part of the income.
February 17th, 2010 at 11:31 AM ^
The S Corp tax rules are much more structured than that of the LLC. The S Corp, for example, has to follow specific rules for distributions; distribution must be in the exact proportion of the shareholder's ownership. The S Corp must also, theoretically anyway, follow the rules of the state in which it is incorporated with respect to shareholder meetings, corporate resolutions etc.The LLC structure allows the taxpayer to elect to be taxed as a partnership. This allows more freedom in dealing with distributions, allocation of income and expenses etc. subject to the partnership agreement and "economic" considerations.
February 17th, 2010 at 10:42 AM ^
As mentioned ITT, there should almost never be tax due on a Form 1120S.
Assuming there was income you should have paid yourself a salary, issued yourself a W-2 and deducted the payroll items on the 1120S.
Any net income or loss remaining should flow through onto a Schedule K-1 which, like your W-2, is reported on your personal 1040.
Tax season is fun.
February 17th, 2010 at 1:54 PM ^
I hired an accountant to do it my first year and then pretty much copied what he did the last 3 years. I tried TurboTax and it's solid, the only thing it (I) screwed up on was somehow it was trying to write off withholding and social security taxes. Otherwise got the same results.
Anyways, here are the basics:
Yearly:
State annual return (Sales, Use, Withholding tax, summary of what you should be paying monthly or quarterly (see below))
Federal unemployment (940)
W2/W3
Local property taxes
State annual reports
1096/1099 (maybe not necessary for you, I only use for rent) non-paying
1120S (line 21 gets transferred to personal 1040, non-paying as a corp.)
Monthly or Quarterly
State witholding (160)
Federal witholding (941)
State unemployment
Sales Tax
Personal:
1040 obviously, estimated (basically only S-corp income (line 21) and capital gains, salary is covered by withholding). Both state and federal.
February 17th, 2010 at 8:19 PM ^
I was really hoping the first response would be someone scolding Brian for not labeling his post OT.
February 19th, 2010 at 12:34 AM ^
I e-mailed you from my work account.
I do a lot of planning and compliance work with single shareholder S-Corps who don't have professional accounting staff on the payroll. I can turn just about any mess/stack of papers into a trial balance (as can probably some of the other CPAs here).
Mattinboots comment is spot-on.
"And the IRS is requiring more and more that you characterize a reasonable amount of the income as compensation and pay self-employment tax."
As others mentioned, it is of utmost importance that you understand stock basis and debt basis. You don't want to deduct losses or take distributions in excess of basis.