Re: Payroll/Taxation question - Saab General Bulletin Board - Saabnet.com
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Re: Payroll/Taxation question
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Posted by Dean [Email] (more from Dean) on Wed, 1 Apr 2009 08:28:51 Share Post by Email
In Reply to: Payroll/Taxation question, Dave, Sat, 28 Mar 2009 18:26:56
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You can pay yourself out of retained earnings, but then you are not going through payroll. Tax issues will work out. But you need to pay into social security if you ever expect to have any benefits.

You can put 20% of your compensation into SEP IRAs and also add $5000 if over 55 as a catch-up. That catch-up is now in TurboTax after I took them to task last year, but getting to that is a hidden easter-egg. I had them enter a program request to fix that. There is some [bad] case law that deems retained earnings cash flows as not eligible for SEP IRAs; often ignored.

Health insurance... high deductibility HSAs can be attractive.

As a S-corp business owner, the business cannot pay your high deductibility health insurance premiums or your SEP. You must to that from your own pockets. You can have the business make these payments if you later pay the business back. I do not know how a LLC will be different.

If you have the cashflow, maxing out SEPs, IRAs and HSAs can generate huge tax savings. If you have investments that are not tax sheltered, sell these as required to slide the funds into SEP and IRA maximum contributions. This last tactic converts tax exposed to tax sheltered while reducing income tax when you do not otherwise have the cashflows to make these tax sheltered investments.

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