Does a sole proprietor of an S-corp create a k-1 & 1099 or W2?

[Deeter]

Hello,

For 2020, I did a 1099-NEC for myself as a single member LLC.  Another CPA told me to start doing W-2s for myself, treating myself as an employee.

I now intend to do that, and I understand I need to report/pay quarterly for withholding.

My question is, how is this done?  

I have an account here:

https://www.ssa.gov/bso/ for SSA, but I think that's just to generate a W-2 at the end of the year?

And now I have created an account here: https://www.eftps.gov/eftps/  

I have to wait till my pin arrives in the mail.

But how do I actually make the quarterly payments for withholding?  Thank you,

[npierson7]

Yes, you will need to treat yourself as an employee of your corporation and pay quarterly payroll taxes by filing Form 941 and annual Form 940 with the IRS.

You can find how to do that here:

E-File Employment Tax Forms

You also can find lots of useful information here:

How to Pay Employer Federal Taxes

[Deeter]

Thank you.

So on that page, it says you can pay through IRS approved software, which you'd have to buy.

But then at the bottom, it shows 

 Electronic Federal Tax Payment System (EFTPS)

So can I use EFTPS for this?

Also, if I have more than one LLC as SCorp, do I need a new EFTPS account for each one, or can you have a single account with multiple EINs?

[ThomasM125]

You can use the EFTPS website to pay in your payroll taxes. You need to set up a separate account for each business under each federal ID number.

[Deeter]

Thank you, but when I set up the account, there was afterward an option for "add additional taxpayer account" or something?  I just didn't know if I could add all the EINs to a single account.

Also, so you use this site for quarterly payments, but do you use BSO on SSA for the actual w-2 at the end of the year?

[MaryK4]

Yes, you can use BSO to report wages to the Social Security Administration.

The service offers fast, free, and secure online W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process W-2s (the Wage and Tax Statement) and W-2Cs (Statement of Corrected Income and Tax Amounts).

@Deeter

[Deeter]

So this is what I'm trying to understand.

I have a single member LLC, which is taxed as an S-corp.

Am I correct that I use BSO once a year to create a W-2, and EFTPS quarterly to pay taxes/deal with withholding, or do I have that wrong?

[JamesG1]

A single member LLC taxed as an S corporation would pay you as an employee on a W-2.

Social Security Business Service Online can report your W-2 income.

EFTPS can report your Federal withholding taxes.

You will likely have a state department of revenue to report state withholding taxes.

[Deeter]

Thank you.  This is what I'm a bit confused about.

I have a BSO account, registered the EIN, but where in BSO do I report W-2 income, and is that done quarterly or yearly?

Just signed up for EFTPS account.  I'm guessing that is quarterly.

I'm familiar with state method.

Thanks!

[ThomasM125]

You use the BSO to prepare the W-2 form at the end of the year only. 

You use the EFTPS to deposit your payroll taxes weekly, monthly or quarterly, depending on how much tax you have to pay. As a rule, if you owe less than $2,500 in taxes at the end of a quarter, you can pay them in when you file your form 941 each quarter. Otherwise, you need to make a deposit on a weekly or monthly basis.

[Deeter]

Thank you.

And to be clear, my wife is also employed by one of the LLCs(it is new so no W-2s.

She is the second of 2 employees.

Does she also need to create a BSO account in that case in order for me to generate a W-2 for her at the end of the year?

I am intending to have more than one BSO account, to have one for each LLC.  However, if I go to "report wages to social security/create w-2, it says you can choose the business which is listed in your profile or a new business, for which you can specify an EIN.  As such, do you really need multiple accounts in that case?

Thank you,

[ReneeM7122]

You need a BSO account for each separate EIN / TIN number.

Keep in mind, however, an LLC owner cannot receive a W-2, and the IRS considers a spouse as an owner.

Here is a TurboTax article about LLCs.

@Deeter

[Deeter]

Thanks!

This is a little confusing, because I understand I AM supposed to provide a W-2 to myself from my LLC filing as scorp for my single member LLC, being treated as an employee.

Are you saying my wife, who is a 50% owner of another LLC which files as an s-corp would not get a W-2?

Or are you saying for the two member LLC, there would only be one w-2, for myself, which covers my wife?

[ReneeM7122]

Please see the following Q&A with more details about LLCs, W-2s and spouses.

@Deeter

[Deeter]

Ok, I was reading it.  So I think in this case, I am the LLC Owner and she would be the employee, since she's the one actually doing the work of the LLC.  We are both 50% owners, but I think the IRS regards me as the owner.

As such, I think I'd just do a single W-2 for the LLC, for her, from what I am reading here.

Does that make sense?  In other words, a single member LLC owned by a husband and wife would have one W-2 employee, which is the non-owner, correct?