Questions

I am a naturopathic medical practitioner and own an S-Corp for my personal client work. However, I do some independant contractor work for anotehr company. If they issued me a 1099, can I claim this as part of my S-Corp income? If not, is it possible to set up payment to my S-corporation, as I act on behalf of my S-Corp (ie. protecting my personal liability and avoiding SE tax via 1099)

You should be able to attribute the earnings to your S corporation. I would recommend a written independent contractor agreement between your S corporation and the third party company. You should provide the third party company with a signed IRS Form W-9 for your S corporation. The W-9 should list the legal entity name of the S corporation, the tax ID number for the S corporation, as well as the mailing address. Be sure to indicate the entity classification as "S Corporation" in Box 3. If the third party company issues you a Form 1099 at the end of the year, the compensation will be reported as paid to your S corporation rather than you as an individual. It's true that net earnings flowing through an S corporation are not subject to self employment taxes; however, as the principal shareholder of the S corporation, you should setup payroll and pay yourself a reasonable wage for being an employee of the company. The IRS heavily scrutinizes S corporations for reasonable compensation issues for sole shareholders.


Answered 5 years ago

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