Before I begin, I know I shouldn't have waited to start my taxes now, especially when I had no idea what I was doing when I made an S-Corp.
I made an S Corp in December which I choose to have taxes filed on that year too (2018). I was a freelancer before.
Initially, I received a 1099 MISC under my personal, but I asked that they change it to my newly formed S-Corp (though the work was done before my S-corp actually was formed and I was paid well before that).
Now, there are 2 days until taxes are due. I haven't done anything for my S-Corp asides from forming it and filing the 2553 in January. I should have been more careful and on top of this, and today I feel hopeless, though I will try to minimize the damage. No putting myself on the payroll, K1, S-Corp taxes (I learned all that after I realized how screwed I was - or am I?)
Essentially, the company I did work for paid my S Corp (I regret asking them to change it) which now my S-Corp does not pay payroll. I don't even know what to do anymore. Am I even screwed? Are there extensions or anything? At this point, I just want to minimize the penalties - I wish I didn't start on a weekend. I haven't paid any dividends or done anything with the S-corp (does issue the stock when forming count as a dividend?).... all the work I did for the company was even before the formation... I just want to dissolve it.
I know that I am in a hole but I will climb out - dedicating all my time to alleviate my ignorance & arrogance - I wish I can speak to a professional but it's the weekend. I will get through this, though.
Thank you, everyone. All help is deeply appreciated.
You'll need to sign in or create an account to connect with an expert.
It may not be as bad as you think...I hope I will relieve some stress for you so that you could sleep at night 🙂
1. What was the effective day of the election on Form 2553? If 2018 and the S-Corp had income (It sounds like it did), then you need to file 2018 S-Corp return. It's too late to file the S-Corp extension since the due date to file was March 15, 2019. But you should file extension on the personal return if you haven't filed yet.
2. If you took no money out of the S-Corp, then you are OK that there was no payroll. However, for 2019, you should determine a reasonable salary for 2018 and 2019. You may want to ask a professional to help you determine that.
3. When you take out the money paying yourself through payroll (up to reasonable salary) you need to pay yourself IN 2019 FOR 2018 AND 2019. For example, your reasonable salary is $3,000 a month. And the company was in operation for 1 month in 2018 (since you started in Dec). You will need to pay yourself $3k for 2018 plus $3k for each month in 2019 that the company was in operation.
4. Then you should start dissolving the S-Corp. Make sure that you will file 2019 tax return (timely, by March 15th, 2020) and mark it as a final return.
5. Be sure to dissolve it correctly through the Secretary of State, also.
6. Then, make sure to sign a new agreement with your clients and provide them with a new W-9.
7. When you do file S-Corp, there will be penalties for filing late. ($195 per each month of not being filed per the number of shareholders...) However, you can request a First-Time Waiver. The IRS pretty much waives those on an automatic basis...
So I think you have a plan now. Good luck! And here is a general article on S-corp if you'd like to read.
Still have questions?
Make a postDid the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.