@EXODUS wrote:
So what if I chance to a SCorp and pay my self for those visits, would I then be able to deduct that on the business side as it’s an expense and the business is not charging for it; but I still have to get paid for my time? I am changing to S Corp because I make too much and will have an employee other than me working in the next few weeks as well.
If you are the owner of an S-corp and you participate materially in the business, you must pay yourself wages or a salary at a fair market rate (what you would have to pay someone else to do the same type and quality of work, if you hired a manager instead of doing it yourself.). Those wages are reported on a W-2, and are subject to tax withholding including social security and medicare taxes. If there are extra profits, you can take them as a distribution that is not subject to payroll taxes. What you can't do is pay yourself a nominal salary (like $1 per day) and take all the profits as a distribution (so you can avoid paying self-employment or payroll taxes).
If you take a fair market rate salary for the work you do for the company, that is a way to get paid for time spent with customers even if you don't bill them. You deduct the salary as a business expense.
But it's really no different in the end.
Suppose you could bill $120,000 for your time over the year, but only bill $100,000 because of this free time situation. Assuming $40,000 of other expenses, you have $60,000 of net income instead of $80,000.
If we suppose instead that you pay yourself a salary of $50,000, then at the end of the year you have $100,000 of revenue, $90,000 of total expenses, and $10,000 net profit. Your income (salary plus profit) is about the same either way.
