sole proprietor LLC treated as S Corp, do I give myself a W2? Do I report the business or payroll to healthcare?

Basically, when you file the IRS Form 8832 to have your LLC treated like an S-Corp, understand that is for *TAX* *PURPOSES* *ONLY* and nothing else.

Now, in order for your LLC to be "treated" like an S-Corp, it must "act" like an S-Corp in every sense of the definition of an S-Corp. That means the business has to obey and follow all the laws, rules, regulations and ordinances that an S-Corp does. So for all intents and purposes when it comes to taxes, the business "is" an S-Corp. Period.

A S-Corp is a completely separate taxable entity that stands on it's own. That's one reason why it files it's own completely separate tax return. The statement that it avoids you having to pay self-employment taxes is somewhat misleading. Remember, self-employment taxes are the employer side of taxes the business pays on behalf of it's employee.

So all you've really done is shift the 15.3% SE tax from you personally, to the S-Corp. So they still get paid - just not by you directly, but by the S-Corp instead.

Now I get the impression that you may not be all that up to snuff on all the rules that S-Corps have to follow. For example, all owner's of an S-Corp are required to take minimum distributions each year which get reported on a K-1. It has nothing to do with W-2 income.

Now since an S-Corp is considered a completely separately taxable entity, an owner of that S-Corp can if they choose, also be a W-2 employee of that S-Corp. But that does not negate that owner from taking the required minimum distribution each year, and reporting it on a K-1.

So if you're not up to snuff on this, I would highly suggest you seek professional help, since the laws, rules and regulations for an S-Corp differ state to state. Failing to follow one or more of those laws, rules or regulations *WILL* be *VERY* costly for the S-Corp. For example, the S-Corp 1120-S tax return is due to the IRS by March 15 of each year. After that, a penalty of $200 per month, per owner is assessed for each month it's late. So if your S-Corp has two owners and you file on March 16, the late filing penalty would be $400.

Failure to pay quarterly and/or payroll taxes on time each quarter also caries a hefty penalty. For some, depending on the size of the payroll, the S-Corp could be required to pay those payroll taxes monthly.

I've seen my fair share of S-Corps go belly up in their first year because the owner(s) were not knowledgeable on the laws governing S-Corps in their state, and all the fines and penalties assessed bankrupted the business before it even got off the ground.

So please, for your own sake and the sake of the business, seek professional help for at least your first year or two of doing this. The cost of professional help is a pittance compared to the fines and penalties that can and will be assessed if things are not done right, and done in a timely manner.

If your state also taxes personal income, then you can double the fines and penalties that would be assessed by the IRS, because the state will assess those fines and penalties also.

Thank you so much for responding! Last year I went through a CPA and I'm thumbing through those forms trying to figure things out. I will take your advice and go to him for another year. 

Don't just "take" it to the CPA for another year. Write down your questions and ask them to the CPA. If you're paying them to just "do" your taxes, you'll never learn anything. Make sure it's understood that you're paying for knowledge, and not just service. You want a tax professional with the heart of a teacher willing to share their knowledge, once they understand you're willing to pay for it.