NOTE ON S CORPORATIONS - I MAY HAVE JUMPED THE GUN

Last week I had an entry about changes in Social Security and Medicare tax for professional S Corporations. When I published this entry it looked almost certain that the Senate was going to go along with the bill that had passed the House. The provision was part of a bill that was going to extend unemployment benefits. Everyone said it was a slam dunk.

Oops. As I write this the bill has not gotten through the Senate and there are attempts to strip the S corporation provisions out of the bill. See the following Update on S Corporations:

The American Jobs and Closing Tax Loopholes Act of 2010 did not get enough votes to proceed in the Senate on Wednesday, leading Senate Finance Committee Chairman Max Baucus, D-Mont., to modify several provisions within the bill, including one that would raise taxes for certain S corporations.

Sorry... I will keep you posted.

Larry Kopsa CPA

QUESTION ON S CORPORATIONS

Can an S Corp salon owner also be a booth renter sole proprietor for tax purposes for their hair styling business? Jim

Jim, yes it is possible for a person to have multiple entities. We have numerous clients with multiple entities. To answer you properly I would have to know exactly what your S corporation is doing. We do have situations where S corporations, or partnerships, or limited liability companies own booth rental operations with several booth renters and then the owner of the operation also rents a booth from the S corporation. If this is what you are referring to you can do this but there may be other options that are better for you.

Check with your tax advisor. A competent tax professional should be able to give you the advise on the best method for you to organize your operation to save taxes and limit your liability.

It is a pleasure serving you.

Larry Kopsa CPA