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Figure out the marginal tax rate on your potential extra earning. I bet it’s not worth it. If going full time only gets you $30k more, I’m guessing you’re still paying full 7.65% FICA on that. Plus state and federal income tax at your top marginal rate.
^^^ good post. I would like, but that function is broken
You could just form an LLC that has its own fancy and professional sounding legal name and EIN and maintains default sole prop taxation, and fill out a new W4 and pretend like you’ve jumped through their hoops. Plead ignorance if they actually try to dig deeper.
But maybe LLCs also pay extra entity taxes in CA even without an S election? I’ve no idea.
I’m kinda with you that I’d be bothered by the unnecessary S Corp hassle and would lean toward walking away if I could replace the income
as in, we’re still working on it?
still largely broken for meOctober 16, 2019 at 7:15 pm MST in reply to: Vanguard backdoor Roth IRA – am I screwing this up? #254071
just to be clear, what you want is better termed an administrator
do you have a 401k-profit sharing plan? usually you would use the same administrator for 401k and CBP.
regarding structure, specifics matter. If potentially eligible for 199a deduction partnership likely to be better. If income high enough 199a deduction is not possible, S corp probably better. Partnership has more flexibility in compensation, if pay might be unequal. Pluses and minuses to both. You’ll need to consult professionals to help (lawyer, CPA)
specifics also matter regarding the transition. If there is an existing entity, is that being dissolved? If this is the case, that may mean all new contracts. Do you want to renegotiate payer contracts?October 16, 2019 at 7:11 pm MST in reply to: Forming a small EM democratic group: how would you do it? #254069Liked by DavidGlennCPA
forum still broke for me
let us know when you sell your leveraged equity funds, unless you’re planning to just ride them down
still broken for me. I was going to clear a bunch of off topic posts from another thread, which I can see on my phone in Chrome Incognito. Desktop Chrome two whole pages of that thread are not visible even after clearing cache etc.
@davidglenncpa thanks for your help
the recurring reimbursement setup is less than ideal because to change the amount you have to go edit each shareholder, you can’t add some additional amount while running payroll, any additional amounts are not able to be categorized with the “Distribution” but rather go as “additional reimbursement”
do you think handling distributions as an off cycle payroll with these amounts entered as a reimbursement would cause problems? With the off cycle setup they can’t be labeled as “distribution”. I would assume as long as one is tracking things correctly with bookkeeping, such a setup would be fine?
Paper checks would work ok also, but handling this through Gusto would be preferred since direct deposit is already setup.
Disappointed to learn that Gusto doesn’t have a means to handle distributions for S Corp shareholder-employees through their payroll platform.
Their recommendation is to handle S Corp distributions outside of payroll.
@davidglenncpa has this been your experience? Do you just have S Corps write shareholders checks, instead?
Gusto can set up an “owner’s draw” but can’t do this for an owner who is also an employee that receives wages.
the other question would be, is OP certain that the “match” is actually taken from salary, as in a true dollar for dollar reduction in W2 wages?
Depending on the practice setup, and whether OP is a shareholder / partner, the “match” could be taken from OP’s total compensation – their “slice of the pie” – of which salary is only one part.
Compensation limit for these purposes is 280,000. So lets say your comp is that
Maximum deferral is 19,000 which is 6.79% of comp
so then you would get 3% match = 8400
so then you can look at the vesting schedule and run some calculations and see how much is “at risk”
if your comp is lower, you can do the math
it’s a strange setup and obviously not a safe harbor plan – safe harbor contributions are always 100% vested. It’s probably allowed because you’re an HCE
^^^ I would like the post but that function is broken for me
what is the match percentage, that really matters in the decision process here because that’s the only way to know how much you stand to lose if you were to leave