Doing an S-corp filing yourself

[Doc29]

Hey all,

I am considering filling as an S-corp in 2017. In the past I have filled my 1099 under my 1040 with schedule C. I believe it would save me 3-4 K in taxes however most accountants I have talked to would charge approx the same. I also have enjoyed doing me taxes myself in the past and enjoyed the control?, I have used Turbotax in the past and very happy with their software, would like to keep with them since I am familiar with their software,

I know but didn't want to tackle something that is not doable or would get me in trouble with the IRS later.

Does anyone have any resources on how to do this or a step by step approach

 

Thanks

[spiritrider]

There is a lot more to an S-Corp than simply filing your taxes. It is fundamentally a very different business entity. You now have a corporation and must pay yourself reasonable compensation as a W-2 employee.

You must pay wages/salary through a payroll process. You must deduct for withholding of Federal and optionally state/local income taxes, FICA, FUTA/SUTA, possibly workman's compensation. Retirement plan employee deferrals must also be deducted from payroll. At least there are payroll systems to help, but I often see people too cheap to even pay for that.

There will be state annual fees, franchise taxes, various other state taxes (on business profits, payroll, etc...).

How are you going to handle health insurance, HSAs accounts, etc...

You are a physician, concentrate on being a physician. Let a professional handle the start up of your corporation. I always recommend that new S-Corps use a professional for at least the first year or two. Then when you can directly see how it is done, then DIY, but still with a professional on a consultative basis.

Full disclosure, I am not an accounting/tax professional so I have nothing to gain by recommending the use of professionals. Just a semi-retired small business owner who has seen many train wrecks of professionals trying to jump in unprepared. The two biggest failures, software consultants and medical/dental professionals.

 

[bjbanjo]

I agree w/ spiritrider.  Have a pro do it or at least check your return a couple times until you get used to it.  I use the H+R block tax program (I think Turbotax is better but old habits are hard to break) and have had no problems w/ S corp.

[The White Coat Investor]

How hard-core of a do-it-yourselfer are you? This is certainly possible to do on your own but we've all got a threshold where it's time to hire a pro. I'm going S Corp (actually LLC filing as an S Corp) this year for WCI so there will be a post or two on it. I filed 2553 the other day. It was no big deal. Payroll is a little more intimidating.

[Kamban]

Doc29 wrote:

I believe it would save me 3-4 K in taxes however most accountants I have talked to would charge approx the same. I also have enjoyed doing me taxes myself in the past and enjoyed the control?, I have used Turbotax in the past and very happy with their software, would like to keep with them since I am familiar with their software,

Click to expand...

I have had a S Corp since 1999, when it was beneficial than a LLC ( things have changed since then).

I set up the S Corp through an attorney for about $1K. Since then the annual filing fee for the S corp has slowly risen from $750 in 1999 to $1500 in 2016. Payroll filing quarterly is now $250. There is no way I can actively practice medicine and also do these taxes. I can do a call for the local hospital for a weekend and it will cover all fully.

I also think that a well established reputed CPA filing taxes has less chance of an audit than me doing on my own. Yes, he can make errors, but I would likely make a hundred times more. Also I do not have the time and inclination to go through the process just to find if he doing it right.

[jfoxcpacfp]

There is no one step-by-step guide because the entity is a creature of the state in which you live and, also, will operate your business. For locum tenens in particular, that can be quite complicated.

You can go to your state's SOS website to file paperwork for your s-corp. You will also file a 2553 with the IRS. Those steps are quite simple. After that, you need to determine what licenses and tax numbers you must file to be in compliance at the state and local level. CA and NY are rather onerous, some states are quite simple.

You definitely need to analyze before taking this step if you'll actually come out ahead, financially, after you have paid for payroll preparation and a separate Form 1120S (S-corp tax return) versus the Medicare taxes you'll save. An s-corp filing shouldn't cost over $2k max, depending where you go. Payroll filing can be done by you under your CPA's oversight to save a little $$. Otherwise, payroll preparation and filing of all monthly/quarterly/annual forms will cost in the neighborhood of $250/quarter and up, again depending on the firm you choose.