Taxes and S-Corp with no profit and single employee [Archive]

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davidx

02-03-2015, 04:54 PM

Freelancier

02-03-2015, 05:10 PM

Once you create a corporation, you'll need to file a K-1 each year until you dissolve it.

Refer to the Instructions for Form 1065 (.pdf), U.S. Return of Partnership Income, for exceptions to filing requirements.
A domestic corporation (including a Subchapter S corporation) must file an income tax return whether it has taxable income or not.
Entities (http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Small-Business,-Self-Employed,-Other-Business/Entities/Entities-4)

davidx

02-05-2015, 02:08 PM

Thank you. I will do that.

smallbiztaxspecialist

02-14-2015, 09:24 PM

You also need to file a Corp tax return, Form 1120-S, even if there is no business revenue to report.

IrekJanek

02-14-2015, 11:24 PM

Yes, you still need to file every year.

checkmate

02-19-2015, 10:18 AM

Definitely make sure you file every year - make sure you do it at the state level also if they have any reporting requirements.

0maha

02-19-2015, 11:07 AM

Last year I formed an S-Corp (software) but I am still the only employee. Since there is zero profit I understood I don't need to pay myself "reasonable salary".

Do I need to file anything tax related in this situation?
Thanks!

One of the best things I ever did, years ago, was find a good local, independent CPA. He handles all this for me, and the cost is negligible.

Actually, he's more than paid for his fees over the years with various tax savings he has identified that I would have never known about.

I strongly encourage anyone, even if you are just starting out, to find a CPA. Every moment an entrepreneur spends thinking about tax law is a moment not spent on growing your business.

As to your current question, just to explain a bit, the issue here is over payroll taxes. All the income from the S-Corp will flow through to your personal return, so it doesn't matter how much you take as salary vs distributions for income tax purposes. The "reasonable salary" requirement is there so that you do not use the S-Corp as a vehicle to avoid payroll taxes (ie, SS/Medicare).