Probably this is something you want to confer with a local CPA about. Possibly you’ve got some easy ways to simplify, but you want to be careful you don’t create an expensive tax mess when you, for example, liquidate the S corporation.

Thanks so much for your reply Steve. I actually set it up when it was my full time job, but then accepted a full time position, but still had a few billable consultants that have continued to work under my s corp. Do you have any articles about switching from an S Corp to an LLC, or do you recommend I shut down my S Corp and start a new LLC?

You probably shouldn’t be an S corporation. You should operate, probably, as an LLC taxed as a disregarded entity.

More details here: http://evergreensmallbusiness.com/should-you-use-an-s-corporation-for-a-sideline-or-part-time-business/

The rules just say you need to pay shareholder-employee reasonable wages. Paying once a year in December should work fine. (Lots of people do this.)

I have a single-person S-Corp. I want to take payroll just once a year on December 31st and make all my federal deposits at that time on a salary of roughly 140-160K.
Is this ok to do? Does the IRS require to take a more frequent payroll. Just trying to avoiding all the paperwork and deposits throughout the year.
Thanks,
Z

Ok thanks – and reading up on the 941 requirement, the first filing needs to be when wages are first filed. I havent paid myself a salary yet, so I will file both state/federal wage reporting for quarter 2 after things are confirmed.

You want to operate as if the 2553 will go thru. First, it probably will. Second, if you botched election, you can get late election relief if you act as if you’re an S corporation.

Tip: Call IRS in a couple of months. If they haven’t accepted your S election, have a CPA who does late S elections help you redo the election.

I have a specific question; I just filed 2553 to convert my existing 1 person LLC taxation status to an S corp on 03/15/18 (the deadline) and want the status to be for 2018, but it sounds like there is a chance the IRS does not accept it? I wont know for 60 days, but at that point I will have missed both quarterly filing requirements. What is the recommendation in this case? Hope it went through and file quarter 1 with salary info for myself and unemployment tax payments? Sounds like a mess if I get a denial letter and already filed various forms/operated as an s corp.

Amazing article by the way, best resource I have found so far.

Thanks!

I’m keeping the S-Corp election because I’m in a volatile sector and there is potential to rapidly exceed reasonable salary and I don’t mind the extra complication. Besides that, I am expanding my business daily so eventually my baseline should exceed the reasonable salary.

E book? I’ll check it out.

Thank you Steve!

Izzy