Author Topic: Decent growing small biz probably need CPA / S corp / I'm clueless  (Read 685 times)

tmoneyearlyretiree

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Hey fellow mustachians,

So I was sort of early retired and had set up everything for that and then I started a business and it's become successful enough that I'm realizing it's outpacing my limited tax understanding. Here's what I'm dealing with hoping you all can help.

On track for something low six figures probably in net profit for the year. I'd like to do S corp as I think my primary job would be amorphously defined enough to warrant a lower salary "payment" from the S corp.

Getting married in Nov, would like to add my future wife onto the payroll to do an employer contribution to an individual 401k for her. She's making the max already for SS deductions, so I'm wondering if it'd be smart to pay her like 50k or something like that so I could add a bit in retirement.

I've got an individual 401k and maxed the employee 18k, and I'm wanting to wait to see how the biz does til the end of the year before I make any employer contributions.

For charitable donations I've just been counting on those being personal that I might get to itemize on personal return but will need to pay payroll taxes on. If that's not the case would love to know.

I read MMM's tax ninja recommendation but I bet he's swamped. Would love a proactive fairly priced CPA that would ideally have Missouri / St. Louis knowledge too or could point me somewhere for that.

Would love to hear your experience hiring a CPA, how much one should cost, and what they should do for you. I do intermediate level stuff like rental depreciation schedules, foreign tax credits, investment losses and the like, but I fear this small biz S corp stuff is above my pay grade.

I read somewhere that MMM paid his guy like 2000 for what he did which sounded like a steal. I talked to a young guy hired at one of the large regional CPA firms here in town and he quoted me like 5000 and I felt like I was a meal ticket instead of getting a consultative partner to grow.

THANK YOU!!!
Blog inspired by MMM at http://www.millennialmoola.com

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CareCPA

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #1 on: August 03, 2017, 05:31:33 PM »
Your prices are going to vary wildly based on what type of firm you are looking for. Obviously if you go with a larger firm, expect to pay a large amount. Even at large regional firms, partner rates can top $300 an hour, and new staff will be around $100.
Make sure you find someone who is tech-forward as well. It will save a ton of time, which should mean lower fees for you.

I highly recommend following the path you're exploring, and finding a CPA for your business. As SeattleCPA is known to say, an S Corp return is not a DIY form.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

tmoneyearlyretiree

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #2 on: August 03, 2017, 11:15:00 PM »
What do you mean about tech forward? I don't mind paying but reading about MMM's experience and how he found such a helpful CPA makes me look on in envy

Hope I can find someone similar. Could thousand bucks excellent value great long term thinking about how to structure and grow.
Blog inspired by MMM at http://www.millennialmoola.com

Book about retiring by 25 @
http://www.amazon.com/gp/product/B010QW3HCO?*Version*=1&*entries*=0

CareCPA

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #3 on: August 04, 2017, 06:16:11 AM »
What do you mean about tech forward? I don't mind paying but reading about MMM's experience and how he found such a helpful CPA makes me look on in envy

Hope I can find someone similar. Could thousand bucks excellent value great long term thinking about how to structure and grow.
Tech forward in two ways:
First, since you have a blog, I'm assuming your income is related to that. In which case, you want someone who understands your business. Many "old school" CPAs have trouble when a company doesn't have a traditional business setup (i.e. office, retail store, etc).

Second, if you're like me, you don't want to waste time sitting in someone's office to discuss your finances, and you don't want to have to deal with physical papers all the time. Modern CPAs are paperless, and utilize software to integrate tax and bookkeeping work (and payroll, and 401k, and expense tracking - almost everything can be integrated). They are also setup for virtual meetings and document transmittal. I have clients for whom I did not print out a single piece of paper this year.
This also opens up your search to non-local accountants. Don't take this as advertising, but I have clients in Michigan, Texas, Florida, etc.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

SeattleCPA

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #4 on: August 04, 2017, 08:44:40 AM »
Hey fellow mustachians,

So I was sort of early retired and had set up everything for that and then I started a business and it's become successful enough that I'm realizing it's outpacing my limited tax understanding. Here's what I'm dealing with hoping you all can help.

On track for something low six figures probably in net profit for the year. I'd like to do S corp as I think my primary job would be amorphously defined enough to warrant a lower salary "payment" from the S corp.

Getting married in Nov, would like to add my future wife onto the payroll to do an employer contribution to an individual 401k for her. She's making the max already for SS deductions, so I'm wondering if it'd be smart to pay her like 50k or something like that so I could add a bit in retirement.

I've got an individual 401k and maxed the employee 18k, and I'm wanting to wait to see how the biz does til the end of the year before I make any employer contributions.

For charitable donations I've just been counting on those being personal that I might get to itemize on personal return but will need to pay payroll taxes on. If that's not the case would love to know.

I read MMM's tax ninja recommendation but I bet he's swamped. Would love a proactive fairly priced CPA that would ideally have Missouri / St. Louis knowledge too or could point me somewhere for that.

Would love to hear your experience hiring a CPA, how much one should cost, and what they should do for you. I do intermediate level stuff like rental depreciation schedules, foreign tax credits, investment losses and the like, but I fear this small biz S corp stuff is above my pay grade.

I read somewhere that MMM paid his guy like 2000 for what he did which sounded like a steal. I talked to a young guy hired at one of the large regional CPA firms here in town and he quoted me like 5000 and I felt like I was a meal ticket instead of getting a consultative partner to grow.

THANK YOU!!!

FWIW, I doubt you want to put your new spouse on the payroll. I can't see what extra benefit you get for that since spouse will be limited to $18k of elective deferrals. (And spouse should just get that from current job.) But it's pretty clear you'll get beat up with payroll taxes on that.

Here are a couple of longer discussions of this issue, BTW:

http://www.scorporationsexplained.com/s-corporation-employ-the-owner-spouse.htm

http://www.scorporationsexplained.com/what-pension-plans-are-available-for-Scorporation.htm

I'll echo CARECPA's echo of my apparently usual comment: Yikes! For goodness sake, don't DIY the 1120S return. It's not a DIY project. (Lots of EAs and CPAs aren't even that comfortable doing them... and they know how to construct financial statements, etc.)


My blog Evergreen Small Business
My free downloadable ebook: Thirteen Word Retirement Plan

CareCPA

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #5 on: August 04, 2017, 09:08:18 AM »
[...] (Lots of EAs and CPAs aren't even that comfortable doing them... and they know how to construct financial statements, etc.)
I'll second this. We've cleaned up a lot of crap, even from other CPAs. I'm sure SeattleCPA has seen worse, given his tenure in the field.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

SeattleCPA

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #6 on: August 04, 2017, 04:09:49 PM »
[...] (Lots of EAs and CPAs aren't even that comfortable doing them... and they know how to construct financial statements, etc.)
I'll second this. We've cleaned up a lot of crap, even from other CPAs. I'm sure SeattleCPA has seen worse, given his tenure in the field.

+1
My blog Evergreen Small Business
My free downloadable ebook: Thirteen Word Retirement Plan

With This Herring

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #7 on: August 04, 2017, 06:25:09 PM »
For charitable donations I've just been counting on those being personal that I might get to itemize on personal return but will need to pay payroll taxes on. If that's not the case would love to know.

I'm not going to comment on pricing and your other questions, but your charitable donations will just flow through your K-1 to your personal return Schedule A if you go the S Corp route.  They are an item that is just a straight pass-through.  Section 179 depreciation is a similar item.  You won't need to pay payroll taxes on the charitable donations, as they aren't salary.
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Go soak your beans.  You know you keep forgetting.

tmoneyearlyretiree

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #8 on: August 05, 2017, 07:15:52 PM »
Thank you to everyone replying much appreciated. Any of you have the capacity to take on clients in Missouri? I used to be in Florida but that currently doesn't help me haha. My fiancee is a physician (getting married Nov of this year) and the thought on paying her was that she's already paying the max in SS FICA tax, maybe I'm clueless but I was going to ask a CPA once I get one if I could pay her as a way of doing a $10,000-$15,000 employer contribution for her (she doesn't currently get one but maxes her 401k). Would this affect her payroll tax? I thought not since she's already paying the max.

I'd love to search nationally, just don't know where to begin. If folks have recommendations I'm all ears, only requirement would be you'd be able to help given I'm in Missouri.
Blog inspired by MMM at http://www.millennialmoola.com

Book about retiring by 25 @
http://www.amazon.com/gp/product/B010QW3HCO?*Version*=1&*entries*=0

SeattleCPA

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Re: Decent growing small biz probably need CPA / S corp / I'm clueless
« Reply #9 on: August 07, 2017, 01:39:19 PM »
Thank you to everyone replying much appreciated. Any of you have the capacity to take on clients in Missouri? I used to be in Florida but that currently doesn't help me haha. My fiancee is a physician (getting married Nov of this year) and the thought on paying her was that she's already paying the max in SS FICA tax, maybe I'm clueless but I was going to ask a CPA once I get one if I could pay her as a way of doing a $10,000-$15,000 employer contribution for her (she doesn't currently get one but maxes her 401k). Would this affect her payroll tax? I thought not since she's already paying the max.

I'd love to search nationally, just don't know where to begin. If folks have recommendations I'm all ears, only requirement would be you'd be able to help given I'm in Missouri.

Many (most?) CPAs serving businesses pretty easily handle multiple states because in our digital economy so many small businesses are operating across state lines.

This means, I think, that you can assume any CPA specializing in corp tax work will be able to handle your state taxes...
My blog Evergreen Small Business
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