“I am the owner of an S-Corporation who works for another company (they pay me as a sub-contractor). For several years I have been paying myself a small salary along with the payroll taxes and unemployment fees.”----> Correct. Although an S Corp does not pay tax on its main business income, the business remains liable for the unemployment taxes. Taxes are only payable in relation to EEs and not shareholders. The IRS also allows S corp owners who are materially involved , taking a hands on role in daily business ,to pay themselves reasonable salary as any other EE. These wages are subject to all state and federal payroll taxes, including unemployment taxes. S corp owners who only took profit distributions, and didn’t receive wages, haven’t contributed to unemployment taxes, so they aren’t eligible for unemployment insurance.
“ My work with this other company will discontinue shortly as they are going out of business. Can I collect unemployment if I dissolve the business (or sign it over to my husband)? “---->Some S corp owners are permitted to receive unemployment compensation. I guess you need to take it up with your Local Unemployment Office /state dept of labor to get actual confirmation! I guess it depends; depending upon the corporate structure, state laws and the circumstances surrounding a business closure, you, a S corp owner may be entitled to receive unemployment benefits. Some owners of an S corps are eligible to receive unemployment benefits, although only if they meet requirements. State law also determines eligibility for unemployment benefits, and 14 states ,i.e., AK, CA, DE,OR or HI etc, place limits on corporate officers’ eligibility for benefits. Some states offer benefits to corporate officers who receive wages that are subject to federal unemployment taxes, while some refuse benefits to owners who own more than 50 percent of the company’s stock. Additionally, many states don’t allow S corp owners to collect unemployment insurance benefits if they sold or leased the business against which they’re making unemployment claims.
“I have been told I could turn the company over to my husband at the end of the year and then in January file for unemployment and was also told I would need to dissolve the company but would need to wait until 2013.”----->It depends on the situation; as described above, you need to contact your state Unemployment office.state Dept of LAbor for more accurate info in detail. Because unemployment agency workers individually evaluate each claim, all S corp owner/workers’ claims may not be approved. Because federal regulations require claimants to be unemployed through no fault of their own, S corp owners may need to demonstrate that the company went out of business because of economic reasons and its closure wasn’t a personal decision. Many states disqualify owners from receiving benefits if their company closed down and earnings were split among owners.
Yo can dissolve your S corp at any time you want.Dissolution occurs at the state level, not the federal level. The state in which the S corp was incorporated is the state in which the S corp needs to dissolve. The specific requirements differ from one state to the next, but most states require the S corp to obtain a certi of dissolution. It is important to know how to dissolve your S corp correctly to minimize risks and liability.There are several steps you must complete in a corporate dissolution whether you want to dissolve a corporation in DE, CA, Florida, NYS or another state. However, each state might run a bit differently.You need to notify the IRS you are closing your corporation .You have 30 days to send in IRS form 966. Send it to the address you usually send your corporate tax returns. Make sure you pay up your taxes/debts or etc. If you don't file all the appropriate forms with the IRS, you may incur tax penalties for late filing or nonfiling. Dissolution is more complex than incorporation, and thus you may need to obtain professional legal, tax and/or business advice to assure the filer’s goals and intentions are met, that requirements of the law are satisfied, and that the shareholders, officers and directors are protected even after the dissolution.