The most prestigious law school admissions discussion board in the world.
|
 |
 
|
Anyone here practicing law using a professional corporation?
Poast new message in this thread
Date: January 9th, 2017 3:54 PM Author: Hot alcoholic sweet tailpipe plaza How do you deal with payroll and accounting?
Do you use a corporate card for all expenses or if you have a better personal card, do you reimburse yourself for expenses spent on the personal card? |
 |
Date: January 9th, 2017 4:06 PM Author: burgundy center potus you can use a "personal" card as a business card, as long as the only things you put on it are business expenses. doesn't matter if it's not officially a "business" card, only that you keep personal and business expenses segregated on a per-card basis. then have the business pay it directly. that's the easiest.
if you want to mix personal and business expenses on the same card, then you have to track expenses and do reimbursement. well, you don't absolutely have to, but if you're ever audited you will need those records. |
|
Date: January 9th, 2017 4:13 PM Author: burgundy center potus for payroll just use quicken payroll or some other online service. do not do it yourself. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32335635) |
Date: January 9th, 2017 4:23 PM Author: Cerebral ticket booth put everything you can (within reason) on a corporate card -- get the new chase business preferred. If you use personal card reimburse yourself w/ invoice.
Quickbooks accounting. Accountant.
edit: wait why do you care? |
|
Date: January 9th, 2017 5:22 PM Author: Hot alcoholic sweet tailpipe plaza I am going to get the chase business preferred I think and use that to book travel and pay for utilities and car lease (if I lease a car).
My chase sapphire reserve is my best card for meals and I would like to use that card for the meals I expense as business expenses. I will also use that card for every day going to lunch at chipotle.
I formed a PC this year and will start getting paid into it next week so I need to figure this shit out. |
|
Date: January 9th, 2017 6:26 PM Author: Hot alcoholic sweet tailpipe plaza (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32336565) |
|
Date: January 9th, 2017 6:28 PM Author: silver school What is this? What's wrong with just being in a partnership? (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32336579) |
|
Date: January 9th, 2017 6:53 PM Author: Hot alcoholic sweet tailpipe plaza easier to deduct "business expenses" (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32336726) |
|
Date: January 9th, 2017 6:54 PM Author: white area factory reset button Out of genuine curiosity, why/how? (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32336735) |
|
Date: January 9th, 2017 7:00 PM Author: Hot alcoholic sweet tailpipe plaza Well lets say you want to expense every single meal over $100 as a potential business expense. Basically most restaurant meals with wife or friends, but excluding lunch at chipotle.
you may also want to expenses you cell phone bill, your internet bill, the cost of certain trips and the lease payments and gas on your car which you use for business meetings and such.
You could end up expensing $35,000 per year or more on these "business expenses."
You are allowed to deduct the same business expenses as an individual as your professional corporation can.
However as an individual, deducting $40,000 per year in meals, entertainment and lease payments will put you at the top 2% of individual business expense deductions.
Entering $40,000 as a corporations business expenses probably puts you in the bottom 5% of corporate expenses for meals and such - much less likely to raise audit flags. |
|
Date: January 9th, 2017 7:05 PM Author: white area factory reset button Why does the corporate structure affect this?
If a PC wouldn't the business deduction be captured on the 1120? If a partnership on the 1065, schedule k and k1s for the partners?
I'm not seeing why this is a personal vs corporate business deduction issue.
Or is this not related to your firm and a sole practitioner question?
|
|
Date: January 9th, 2017 7:44 PM Author: Hot alcoholic sweet tailpipe plaza i don't think non-equity partners file K-1's.
As such if you are filing an individual tax return as an employee and have $40K in deductions, that might look weird? I dunno. |
|
Date: January 9th, 2017 8:04 PM Author: white area factory reset button Ah gotcha.
Where I see the problem is you can only deduct expenses to the extent you have income. So let's say you set up an entity it would either have no income and thus you would get no use of the business deduction or you would claim your firm wages as business income and be subject to double tax (unless you used a flow through like an s-Corp or llc). I think this would look especially bizarre if you are a w2 employee. |
|
Date: January 10th, 2017 1:08 AM Author: Hot alcoholic sweet tailpipe plaza What I would do is deposit the entire paycheck from my firm in the corporations account, pay all business expenses (or reimburse) from the corporate account, then pay myself salary (as the sole employee) equal to 100% of the remaining revenue from the corporation. So the corporation has a profit of $0 every year and my take home income is $30K less than it might otherwise be because the corporation paid for a bunch of expenses. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32339616) |
|
Date: January 10th, 2017 1:14 AM Author: stirring cobalt fanboi sanctuary are you actually planning to do this? does not seem wise. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32339643) |
|
Date: January 10th, 2017 1:15 AM Author: Hot alcoholic sweet tailpipe plaza no i am just asking about it. we had a few poasters who forms corporations like imposter, but he hasn't been around for a while. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32339651) |
|
Date: January 10th, 2017 1:17 AM Author: stirring cobalt fanboi sanctuary are you w2 now or 1099? unless your firm is going to hire your pc this doesn't smell right unless you are taking clients/business outside the firm's clients and have legit biz expenses. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32339664) |
|
Date: January 10th, 2017 7:07 AM Author: white area factory reset button Yeah what I was getting at above is that it doesn't smell right to have a corporation set up just to funnel the sole owner's w-2 wages to himself and clearly not intended to make a profit. On audit this would look worse than claiming all as business expenses on your 1040. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32340143) |
|
Date: January 10th, 2017 2:21 PM Author: Hot alcoholic sweet tailpipe plaza the firms hires and pays the PC. This is pretty common. Only controversial part is what you might allocate to business expenses. (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32342302) |
|
Date: January 10th, 2017 7:36 AM Author: 180 chestnut indian lodge haunted graveyard You can only deduct 50% of the cost of meals though, right? (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32340204) |
|
Date: January 9th, 2017 6:54 PM Author: white area factory reset button Why do you have to deal with these issues? (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32336730) |
|
Date: January 9th, 2017 6:57 PM Author: Razzle giraffe office On his 2nd day of partnership, earl is going to circulate a memo to all partners about how they've been doing it wrong for decades (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32336751) |
|
Date: January 9th, 2017 8:09 PM Author: Onyx thriller meetinghouse One weird trick fhe IRS hates (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32337180) |
|
Date: January 10th, 2017 1:11 AM Author: gay yapping corner fat ankles (http://www.autoadmit.com/thread.php?thread_id=3486318&forum_id=2#32339629) |
|
Date: January 10th, 2017 8:03 AM Author: boyish sepia karate therapy Why in the FUCK are you trying to defraud the US Government? Filing as a corporation is not intended for individuals to reduce their tax liability.
It sounds like you're an employee. You don't have an outside gig or own small business. Any and all expenses related to your job should be paid or reimbursed by the company that employees you. Lunches, Internet, parking, transportation if they allow it ... but if all you do is sit in the same office all day with no outside responsibilities, getting a work car justified is a tough sale ... that's all on your employer.
Now, you can claim that you run your own business with your employer as your sole client. Iffy, but possible. Then you'd need the company to pay your S Corp or whatever, not you. And you could pay yourself from the S Corp. But all expenses related to this "gig" you're setting up for yourself should be paid by the employer, and they should take the deduction. Unless you are generating additional outside work for your S Corp, the IRS will sniff out that you're trying to expense a personal television or trips to Hawaii pre-tax. You're not going to win that game.
PLUS ... taking your salary to the S Corp, then paying yourself, means that your S Corp is on the hook for things like payroll taxes, workers comp, SSI, all that crap. You're on the Obamacare market for health insurance. Your social security contribution basically doubles, since you're also paying the employer's share.
Don't be cute and try to get the government to pay the tax on your dinners at Houston's. |
|
Date: January 10th, 2017 2:20 PM Author: Hot alcoholic sweet tailpipe plaza the way it works is that the firm pays your PC for everything and you repay the firm for your 401K and profit sharing contributions and your medical/dental contribution.
You are correct that the PC pays all payroll taxes, SSI, etc. And you pay the employers share of SS and Medicare - which is the case for partners anyway, unfortunately. The Employers share of those taxes is deductible as a business expense at least.
But you are wrong if you think this is not a common and accepted practice in law firms. The only thing sketchy about it is potentially whether you allocate too many things as business expenses. |
|
Date: January 10th, 2017 8:28 AM Author: hyperventilating obsidian business firm PLLC with an S-Election, AMA. Just put everything on the business credit/debit card and later if you want to be honest about it you break down personal vs. business and just make an accounting journal entry moving the personal portion of the expenses over to owner distributions. |
|
Date: January 10th, 2017 2:16 PM Author: Hot alcoholic sweet tailpipe plaza PLLC is not allowed in CA. C-corp or S corp only.
Seems like a lot of the gloom and doom warnings ITT come from ignorance of common practices.
It is very common for lawyers to practice through professional corporations and for the law firm to pay the PC, and have the PC pay the lawyer wages.
If your personal credit card has much better rewards for meals than you business card, can you reimburse the personal card for the meals you allocate towards business use?
Also how do you handle payroll? |