guidance on single member S-Corp

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audioaxes
Posts: 212
Joined: Tue Feb 13, 2018 6:16 pm

guidance on single member S-Corp

Post by audioaxes »

<1 year old S-Corp owned by wife for her psychology practice
Currently use Join Heard for bookkeeping and tax filing and Gusto for payroll (she has not paid herself out just yet).
Join Heard provides my wife with a CPA for general questions but his specialty is with knowing the ropes of what makes expenses deductible or not... many of our questions is out of his scope. With some of the tasks she is trying to do there are more questions than answers.
What would be the recommended approach for receiving further professional guidance? Should we look for some generic legal/accounting counseling subscription or perhaps a local accountant/lawyer?
Would it be better to go with a one stop shop service that provides bookeeping,payroll, and overall business guidance?
Any advice is appreciated. thanks
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Raspberry-503
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Joined: Sat Oct 03, 2020 6:42 am

Re: guidance on single member S-Corp

Post by Raspberry-503 »

My wife is just starting an S-Corp, so we don't have much experience yet, but we found a local independent accountant (not a big firm) that specializes in small/single-person businesses. We found that she provided much more insight than the bigger firms, e.g. she explained why my wife should do an S-Corp and not an LLC, and went over several options on how to decide on her salary (in the end we will put it all in a pre-tax 401k)
Topic Author
audioaxes
Posts: 212
Joined: Tue Feb 13, 2018 6:16 pm

Re: guidance on single member S-Corp

Post by audioaxes »

nice, does this accountant handle everything for you? (payroll, bookkeeping, tax filling, general guidance)?
here is a recent example of something that I could have used more guidance on... We were looking into adding myself onto her board of directors and had multiple questions on how to do this. The Join Heard CPA basically gave a should shrug and said to talk to an attorney on this and wasnt really interested in entertaining any potential tax advantage ideas we had for this. We go to the attorney that helped her form her S-corp, and he wants to charge $800 for this change which is like 60% of the price we charged for the S-corp formation from him. After spinning in circles for hours doing our own research we confirmed this is non-trivial change that should be handled by a professional and found someone reputable who was willing to do it for half the price. I guess ultimately the CPA pointed us in the right direction but I feel like we could benefit from a professional who would provide more active guidance.
CoastLawyer2030
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Location: The Buckeye State

Re: guidance on single member S-Corp

Post by CoastLawyer2030 »

audioaxes wrote: Thu Dec 02, 2021 2:02 am <1 year old S-Corp owned by wife for her psychology practice
Currently use Join Heard for bookkeeping and tax filing and Gusto for payroll (she has not paid herself out just yet).
Join Heard provides my wife with a CPA for general questions but his specialty is with knowing the ropes of what makes expenses deductible or not... many of our questions is out of his scope. With some of the tasks she is trying to do there are more questions than answers.
What would be the recommended approach for receiving further professional guidance? Should we look for some generic legal/accounting counseling subscription or perhaps a local accountant/lawyer?
Would it be better to go with a one stop shop service that provides bookeeping,payroll, and overall business guidance?
Any advice is appreciated. thanks
I operate a solo attorney S-Corp and pay myself a salary (I use Square, not Gusto). I have a CPA on retainer and we meet quarterly, and we generally have an extensive meeting in January to review prior year's numbers, prepare tax estimates for upcoming year, analyze appropriate salary given profit projections, etc. Probably the best $1,000 or so I spend per year.
audioaxes wrote: Fri Dec 03, 2021 4:02 am nice, does this accountant handle everything for you? (payroll, bookkeeping, tax filling, general guidance)?
here is a recent example of something that I could have used more guidance on... We were looking into adding myself onto her board of directors and had multiple questions on how to do this. The Join Heard CPA basically gave a should shrug and said to talk to an attorney on this and wasnt really interested in entertaining any potential tax advantage ideas we had for this. We go to the attorney that helped her form her S-corp, and he wants to charge $800 for this change which is like 60% of the price we charged for the S-corp formation from him. After spinning in circles for hours doing our own research we confirmed this is non-trivial change that should be handled by a professional and found someone reputable who was willing to do it for half the price. I guess ultimately the CPA pointed us in the right direction but I feel like we could benefit from a professional who would provide more active guidance.
I respectfully am confused as to why you think this was an accounting issue and not a legal one. Making changes to the Board is a legal issue. I am not an accountant but I have no idea how changing the Board could in any way affect overall net taxes. You got good advice to go see a lawyer.

I also respectfully have zero idea why your wife even has a Board, let alone wants to add you to a Board, given that this is a one person S-Corp. Are you saying that your wife's company's Articles and Bylaws state that she is is the president, secretary, and treasurer? Or are others on the board already? I thought this was a one-person S-Corp? Again, why even have a Board? Why not create an LLC and just file the election to have it taxed as an S-Corp (far, far, far easier)?

Creating complex corporate governance will just make more work for everyone involved. Quite frankly, when I have to file suit against a small business, I always request their corporate documents. If they are not following their corporate documents, I argue that it is a sham entity, and that I should be able to collect from the business owners individually. This argument does not always work, but it has worked in the past. So, are you keeping proper minutes? Having the appropriate meetings? Etc.?

I am a freaking lawyer and I knew I was too lazy to do all the corporate legal stuff. Thus, my practice is a one-member LLC (taxed as an S-Corp) with an operating agreement that says I have no meetings, no minutes, etc. Lazy as lazy gets.

I am very curious as to why you want to be on the Board, what advantages you think this would have, and why your wife even has a Board. I am also curious as to whether your state has restrictions on who can be on the Board for a professional practice like this.
hachiko
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Re: guidance on single member S-Corp

Post by hachiko »

I also agree that that is certainly a legal question about how to change the makeup of the board and you received the correct advice to consult a competent professional. Did you tell the tax adviser what tax benefits you were thinking about? I'm curious what tax benefits you're looking for. Are you trying to have the S-Corp employ you for some reason?

Also, generally formations are simpler than changes because formations can be done with basically boilerplate documents, especially for a one person company. Changes (especially from 1 person to 2 people) to management structure can be much more complex, because now you can have disagreement, and that necessitates discussions about how you want to deal with disagreement and memorializing that in writing. I'm a bit surprised you were able to get a lawyer to do that for $400 with no prior history.
Last edited by hachiko on Fri Dec 03, 2021 11:35 am, edited 1 time in total.
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Mullins
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Re: guidance on single member S-Corp

Post by Mullins »

Basically, you hold a meeting, document it as "minutes," appoint the names of the people on the board, and have the members sign it agreeing to serve. If your state requires an annual or biennial update stating the directors, you file the update when due. This does not require formidable legal expenses.

I assume the tax advantage you're thinking about would be to deduct any allowable travel, dining and entertainment with your board. If your CPA doesn't know or doesn't care to discuss that, find another who does.

Are there any professional psychologist associations she can attend to rub elbows with others and get suggestions what they do and who they use?
"The Quality of the Answer Depends on the Quality of Your Question."
5outof10
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Joined: Fri Oct 22, 2021 8:03 pm

Re: guidance on single member S-Corp

Post by 5outof10 »

Ditto comments regarding hiring local accountant and attorney.


Are you trying to be on the Board so you have access to her company's retirement plan?

Would it be easier to be a sole Member LLC, taxed as an S-corp, that is member-managed (no "Board" at all), give some authority to Officers (e.g., President, VP, Treasurer, Secretary), name you an Officer, and pay you for your Officer duties?
Checking 10K, Sinking Funds 50K (HYSA/MMF), EF 50K (I bonds), Taxable/Retirement: 72% VTI, 18% VXUS, 10% BND | I would like to own a gold bar one day, to be able to say I own a gold bar.
Topic Author
audioaxes
Posts: 212
Joined: Tue Feb 13, 2018 6:16 pm

Re: guidance on single member S-Corp

Post by audioaxes »

it is a weird California requirement of her type of therapy practice. Must be a S-Corp and she must have a board where she fills the positions of President, Treasurer, and Secretary.
hotscot
Posts: 430
Joined: Wed Feb 01, 2012 10:05 am

Re: guidance on single member S-Corp

Post by hotscot »

That's interesting...do you have a link please?
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