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Old 09-07-2014, 10:43 PM
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1099's in business and personal names

Hello,

I am an insurance agent and registered representative with an investment firm. I receive 1099's and am a sole proprietor. I recently set up an LLC (May 2014) and want to be taxed as a S-corp for 2015.

My question is as follows: if I change my commission statements to my LLC name for the rest of 2014, how will that affect my taxes since I will receive 2 different 1099's, one in my personal name and one in the business name? Should I wait to have the change in commission payments effective for Jan. 1, 2015 instead?

For 2015, I will set up payroll and pay myself on a W-2.

Thank you for your help,

Gina



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Old 09-08-2014, 03:56 PM
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Originally Posted by ginardo7 View Post
Hello,

I am an insurance agent and registered representative with an investment firm. I receive 1099's and am a sole proprietor. I recently set up an LLC (May 2014) and want to be taxed as a S-corp for 2015.

My question is as follows: if I change my commission statements to my LLC name for the rest of 2014, how will that affect my taxes since I will receive 2 different 1099's, one in my personal name and one in the business name? Should I wait to have the change in commission payments effective for Jan. 1, 2015 instead?

For 2015, I will set up payroll and pay myself on a W-2.

Thank you for your help,

Gina
My question is as follows: if I change my commission statements to my LLC name for the rest of 2014, how will that affect my taxes since I will receive 2 different 1099's, one in my personal name and one in the business name?===========> In general, an S corps do not get 1099's. as it's really business income, and you were acting as a repre. of the S-Corp, it's quite proper to include the income on the S-Corp's return.You could report on your sch c a payment to the s corp and then claim the income on the 1120S .The net effect will be that you won't have the self employment tax on the s-corp income.However, be aware that you should be paying yourself a salary and withholding taxes. If you aren't, and the IRS audits you1099 income in S corp’s name needs to be reported as the income on the S corp’s 1120S. so, even though you receive 1099s in your name, you STILL show 1099s income as corporate income on the S corp’s 1120S. In general, you need to send a 1099-MISC to the LLC or LLP but not to the S Corporation; 1099-MISCs are issued to individuals, estates, partnerships, disregarded single-member LLCs and LLCs treated as partnerships. Corporations and LLCs treated as an association and taxed as a corporation are generally not issued 1099-MISCs UNLESS the payments are: for medical and health care (box 6); for fish purchases paid by cash (box 7); for attorney fees (box 7); or etc. As long as you hire LLCs and pay them more than $600 per year, then you need to file Form 1099-MISC with the IRS to report the amount of the payment. However,this requirement doesn't apply if the LLC has opted to be taxed as a corporation. For this reason, some businesses prefer to hire corporations instead of LLCs because they can avoid filing the 1099-MISC form altogether. Payments to corporations (and, implicitly, all corporations pass through entities or not) are not required to be reported. Firms don't like filing the forms because they often lead to audits. In other words, you need to issue a 1099MISC if the entity you paid is anything other than a corporation, and exception: you MAY issue a 1099 even to corporations as long as the payment is legal fees or rents.

Should I wait to have the change in commission payments effective for Jan. 1, 2015 instead?========>>I do not think so; you need to report it on your Sch C/SE on your 2014 return, NOT until 2015 on your 1120S on your 2015 return.

For 2015, I will set up payroll and pay myself on a W-2.=========>>Correct;as you Completed and files Form 2553 in more than two months and 15 days after the beginning of the tax year 2014, the election is to take effect from 2015. The election must be filed by at any time before the 16th day of the 3rd month of the tax year,2014. A failure to timely file the election is treated as an election for the following tax year.



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