Individuals with high W2 income who also receive 1099 income face complexities in managing bookkeeping and payroll when setting up an S-Corp. The process involves understanding tax implications, managing limited transactions, and ensuring compliance with federal and state regulations.
This complexity can lead to potential errors in tax filings, inefficient financial management, and increased stress due to the need for precise record-keeping and compliance.
Pain Points
- Understanding and applying the BAIT workaround for tax deductions
- Managing limited transactions efficiently
- Ensuring compliance with federal and state tax regulations
- Choosing the right tools for bookkeeping and payroll
- Minimizing errors and simplifying the process for annual tax filings
Hi everyone, MFJ in NJ I have a high paying w2 job where I pay the SS taxes up to the cap; I believe it's 184500, so no SS taxes above this limit. My w2 income is 250k+ so I've already paid it. I have been paid via 1099 for consulting in my personal name for the past few years. The income has increased substantially, so I created an NJ LLC and plan to make the s-corp election. The issue is, I"m doing this to utilize the BAIT workaround so I can deduct the full NJ income taxes on my federal return without the 10k SALT limit. I will also benefit from not paying the additional medicare taxes on top of my 'reasonable salary' from the s-corp. Now, what bookkeeping, payroll do I need? To me, it's a very simple book-keeping, I don't have much expenses aside from some cell phone, internet, office supplies as I"m working remotely. I estimate less than 5 transactions a month in terms of expenses. I will have income coming into the LLC/S-corp from my consulting gigs that I'm currently paid on as a 1099. Instead of my personal name, it'll go to the LLC/s-corp. The income will be 2-3 transactions, and the expenses should be 5 or less transactions a month. Can I do this myself? And just hire a CPA to file the annual return? Does payroll with GUSTO sound like a good idea? Will gusto send the quarterly payments? What about book-keeping? Can I use a spreadsheet? What do you recommend? I want this to be as easy as possible for my CPA at the end of the year.