Forming a S corp to do taxes.!Could I hide my stripper identity from future employer?
Hello girls,
When I form a S corp, is it like giving myself a w2 form? Does it mean future employer think I just worked for some small business? How do I form a s corp? I am very confuse right now. I want to do my
taxes and declare all my money, so I can buy a house in the future. But without jeopardizing my chances of getting hired for a good job in the future. I was always in school and didn't really work, so I never done any
taxes before. I don't have a work history. Does forming a S corp let future employer see that I have some work history..? Sorry, I know I sound all over the place.. Please help! Thank you
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
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When I form a S corp, is it like giving myself a w2 form? Does it mean future employer think I just worked for some small business
An S-Corp inserts an extra business 'entity' in the paper trail that would otherwise exist between yourself and the clubs / adult webcam hosts etc. that are making payments to you. At least superficially, the S-Corp in turn pays you a 'salary' plus a 'dividend', and generates indepedent reports to the IRS of those payments that don't reference strip clubs / adult webcam hosts etc. And those 'salary' payments allow you to list your 'employment' by the S-Corp as work history on a straight job resume.
As to potential future straight job employers discovering that you have worked in the adult entertainment industry, an S-Corp certainly provides some 'interference' in that regard. However, since the EIN of the S-Corp is tied to your name and SS#, any FBI level background check will discover this.
As to forming an S-Corp, there are a lot of options in this regard. They must be registered in a particular state ... which for security / tax and other reasons may not want to be your 'home' state.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
Thank Melonie for the reply. =)
As long as I don't have to tell any of my future employer straight out that I dance before..it is good to me. I doubt any employer would FBI background check me unless I am planning to work for major institutions...which I'm not. Sounds like S corp is also a benefit..since I could list it as work history on my resume.. Since I don't have any work history. Another of my question is ... does it ask for my occupation on the tax return if I do it this route?
If I do taxes as a sole prepiortor , then it will show straight out that I am an entertainer?
Forming an S-corp...I could register one in any state that I plan to dance for a long time? It doesnt have to be my home state?
What about a LLC...? Whats the difference?
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
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does it ask for my occupation on the tax return if I do it this route?
yes, but you can pretty much pick any job title you want for your 'position' in the S-Corp
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If I do taxes as a sole prepiortor , then it will show straight out that I am an entertainer?
The risk factor here is that a 1099 clearly listing the payer as 'Hustler' or 'DejaVu' or 'StreaMates' will wind up being directly linked to your personal tax return's Schedule C and SS# ... instead of being 'obscured' by being listed only by your S-Corp using it's own EI#, with your personal tax return only showing W2 income and 'dividend' income from your S-Corp.
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Forming an S-corp...I could register one in any state that I plan to dance for a long time? It doesnt have to be my home state?
It may be an advantage to form an S-Corp in a different state. Nevada, Wyoming and Maryland S-Corp laws all provide a high degree of 'security' in regards to non gov't inquiries about S-Corp ownership info etc. These states also levee low / zero state income taxes on S-Corps where your home state may tax S-Corps. And of course cursory background checks by potential future employers are far less likely to perform a detailed investigation of an S-Corp located in a different state where they lack contacts.
see for some general discussion
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What about a LLC...? Whats the difference?
see .
The major difference is that an S-Corp allows 'deferred compensation' plus tax advantages on the 'dividend' portion of payments to the owner, where the LLC is more or less a straight pass-through of income to the owner ( all of it taxed as income ) plus no ability to defer LLC income plus no option for a retirement ESOP etc.
Let me try to explain this a different way. Suppose your total dancing / webcam earnings come up to $75k per year. With an LLC that entire $75k will be passed onto you as personal income subject to a 15% SSI/medicare tax plus a 25% marginal federal income tax rate - essentially the same situation as if you file as an unincorporated sole proprietor. With an S-Corp, that $75k can be split between perhaps a $50k 'salary' subject to the same 15% SSI/medicare tax but a 15% mrginal federal income tax rate ... with the remaining $25k being paid in the form of a 'dividend' subject to a 15% qualified dividend tax and zero SSI/medicare tax. Net tax savings from the S-Corp can be $2-3k per year.
On the flip side, S-Corp accounting is more involved and two separate tax returns will need to be filed every year ( which also means less probability of a cursory investigation linking an S-Corp to an individual versus linking an LLC to an individual). In comparison, a single owner LLC can file Schedule C as their tax return ( increasing the probability that the LLC can be easily linked to the individual ).
Again in the way of a disclaimer, every year the gov't / IRS improves its ability to gather and organize information about the incomes and expenditures of Americans. There is no guarantee that an LLC or an S-Corp won't be quickly 'seen through' by a future 'straight' employer's background check. This depends on the degree of scrutiny / effort that the potential employer will put into the background check ... with fields like law / law enforcement, health care, education, banking, gov't service etc. now typically performing an FBI level investigation.
I'll also offer up a general opinion that, if your total earnings are $50k per year or less, there won't be enough tax advantages from an S-Corp to outweigh the additional 'burdens' of accounting and tax filing, and you're better off going the LLC route. However, at the $100k+ earnings level, the S-Corp is a 'no brainer'.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
First, an S corporation is found nowhere in any state law. If you want an S corporation, first you must set up a corporation under some state law. You can set it up most anywhere. If you want some additional security you can hire a registered agent. In Indiana, Corporation Services which is a subsidiary of Barnes and Thornburg is the registered agent for many companies. But, almost any law firm will do the service for a small fee. In North Carolina we have a couple of professional registered agents. Every state does. The registered agent's address becomes your corporation's address with the Secretary of State and you can, for a small additional fee, have the law firm forward all your mail. Of course, as a part of the basic fee, they will forward lawsuit papers to you. (And of course, service on your registered agent constitutes service of process on your corporation.)
Once you have the Corporation established under state law, you execute a form 2553 with the IRS. On the 2553, you will have to disclose the name and social security number of each share holder in the corporation. This is confidential pursuant to 26 U.S.C. 6103. The IRS will only release this information under a warrant, or to collect taxes owed. Thereafter, you will have to file the appropriate tax return annually, generally a for 1120S along with your quarterly reports.
Naturally, you can give yourself any job title you want with the corporation. However, under state law, the corporation must have some officers. Those must be real people, although for a fee and with omissions and errors insurance, lawyers will often serve as officers and directors of corporations. The Secretary of State of each state does make public the names of officers and directors of every corporation organized under state law, and each and every corporation organized under another state's law but authorized to do business within the a particular state.
HTH
Z
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
^^^ actually where your last paragraph is concerned, some 'fine print' interpretation comes into play. The requirements re S-Corp officers, directors etc. are set by each state where the S-Corp is registered and vary widely ... with some states allowing 'single owner' S-Corps where that owner plus a local agency representative fulfill all 'necessary' corporate roles, allowing a local agency representative to serve as the 'public face' of the S-Corp, requiring a warrant for disclosure of S-Corp info ( including providing detailed info to the IRS in the case of a couple of states ) etc. Thus the implication that an S-Corp formed in any state will wind up disclosing owner information to public record isn't true for S-Corps formed in some particular states. And of course this is part of the reason that certain particular states serve as the 'home' for an extremely high number of S-Corps whose owners are residents of different states.
In point of fact, the 'unique' aspects of corporate law in Nevada, Wyoming etc. have given birth to a cottage industry where a local attorney and secretary serve as the 'public face' and corporate officers / accountant for hundreds of small S-Corps ! The attorney's office is listed as the S-Corp's legal address, and publicly released contact info for the S-Corps leads to the secretary receiving snail mail and phone calls, etc. In the absence of a warrant, this constitutes the 'end of the line' for all 'private' inquiries. And in the context of this thread, if a prospective future employer / landlord / lender is provided with special S-Corp contact info you have provided, the secretary will confirm to them that you are indeed an 'employee' of that S-Corp plus provide a 'glowing' reference ! This arrangment may not be highly ethical, but it is 100% 'legal'.
To combine Zofia's and my own comments about S-Corp economics, yes it does cost money to form and 'operate' an S-Corp. Yes the S-Corp's ability to 'transmute' money earned by the S-Corp into a two part payment to the owner ( i.e. a 'salary' plus a 'dividend' ) which will be subject to lower total taxation, and the S-Corp's ability to provide certain tax favored 'employee benefits' to the owner, is real. As to whether the advantages of the latter exceed the costs of the former is a function of how much money the S-Corp is actually earning, the actual operating costs of the S-Corp ( which is dependent on the taxes, fees and regulations imposed by the state the S-Corp is registered in - or lack thereof ) etc. At a $50k annual earnings level it is doubtful that the tax benefits will exceed the operating costs. At a $100k+ annual earnings level it is very probable that the tax benefits will exceed the operating costs.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
What is the first step for me to form a S corp after picking a state to form one ? I am thinking about Pennsylvania, because I am planning to dance there for a long time... Or maybe Maryland, since it is close to PA.
Could I go to an accountant to set a S corp up? Does things get more complicated with a S Corp when doing taxes if I choose to travel around and work? Are the fees very expensive to have all my taxes done ? Or I could
and do it myself with turbo tax after I set up a S Corp?
I am thinking about going for the S corp since I am crucial about not putting exotic dancer for my work history in the future.
I never really worked since I was always in school. So I have no work history that I could put on a resume for a good job in the future. I am almost 26 years old. I am going to dance full time soon. I just want to do all my taxes for it and at the same time, have w 2 and work history to show after I done dancing.... So I could obtain a straight job easier. .. or obtain a mortage loan...
Could I put consultant as the position? or president? vice president? What should I put as title aside from exotic dancer/entertainer?
I really appreciate all these advices you girls are giving me, Melonie and Zofia.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
Most states have the paperwork for forming a corporation on the Secretary of State's website. Some of them, probably most have them as fillable forms. The SecState will have a fee schedule and you must submit the paperwork along with the fee. In a few days to a few weeks depending on the state, they will send you the approved Articles of Incorporation. Then, each year you will have to file a report and in most states, pay a fee. Also, if you dance in another state, you will have to file a foreign corporation report and pay a fee in the new state as well.
Once you have your approved paperwork from the state, you will need a Taxpayer Identification Number. The IRS will give those out online now. Then you will need to file your Sub-S election. A form 2553.
Officially, all this constitutes the practice of law or accounting and I do, as a CPA, recommend that you hire an accountant. It's not that tough, but we (CPAs and attorneys) are good for guiding you through the potential pitfalls. There are plenty and you might benefit from accounting/legal advice. It's been my experience that most people do. (Not so shameless plug for my profession. But, to be fair, I'm not practicing any longer, so I don't directly benefit.)
As far as job title, you're the boss. Give yourself any title you want. I would shy away from consultant. When hiring managers see "consultant" they read "unemployed and lazy." Your company needs officers and directors. My official job title is Chief Executive Officer, Chairman of the Board and Empress of all I survey. So far none of my employees has addressed me as Your Serene Majesty or even Madam Chairman. Although, some of my fellow Directors address me as Madam Chairman.
HTH
Z
As always, you can't rely on this to avoid a tax liability or penalty. Just generalized information and public education.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
Thanks, Zofia.. for reminding me that using "consultant" as a job title might sound lazy to future hiring managers. Interesting, I could use C.E.O. (Chief Executive Officer) as title? What other title you suggest?
Could my mom be named as one of the officers or directors? If she could, could I pay her a salary too?..and she do taxes on it?
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
CEO is fine. Most states will require at least one officer. Some still require two. You can name yourself as an officer, most states require a "president." Some also require a "secretary." CEO is not a required job, but you can certainly call yourself that. When I was dancing, I did not form a corporation, but I did file and get a TPIN for my sole proprietorship. I never gave myself any job title and it's not on my official resume. Of course, I can explain my employment gap by showing I was in college while I was dancing. True, although I have to say I learned as much about business dancing as I did in the School of Business.
Yes, you can name a parent as an officer and/or director. And yes, you can pay them. Of course if you do pay them, you have to issue a W-2 or 1099 as appropriate. I set on the board of directors of my uncle's auto repair company. (He, my dad and I are the only directors.) The company pays me $1,000 per board meeting and they give me a 1099 at the end of the year. One thing you do have to look out for is paying adequately to family members for their services rendered. Pay too much and the service views it as an attempt to hide compensation that should be going to you as either dividends or wages. Pay too little and you can run afoul of the wage and hour act. The service will also wonder if you are trying to convert what are essentially personal expenses into business deductions. So be prepared with a job description for a relative.
HTH
Z
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
I have a question and I've been researching to try to get a straight answer for the past few weeks now. Incorporating/setting up an LLC in another state is always suggested as a way to get around high income tax/having a bit more "privacy", but I've read a few things that say incorporating in one of the tax haven states while doing business in say, California (that's the example they use most because California milks small business owners), you would still owe taxes in the state you are physically present in/operating from. Now, I have no problem with that as I'm not trying to avoid paying state income tax on my earnings, but the then we get into this business of having to register as a "foreign entity" in one of the tax haven states, that being an additional fee/additional tax and yada yada yada where basically any benefit to doing it in the first place is null and void.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
California has a state 'Business Nexus' law which indeed tries to tax all of the income of California based businesses and individuals, even if the actual source of that income is derived from a source outside of California borders. Since an LLC structure is essentially a 100% 'pass through' of net income to the LLC owner(s), if said LLC owner resides in California the Cal FTB will attempt to tax everything the LLC 'paid' to them, regardless of where the LLC is based / registered. The same 'Business Nexus' law also says that an out of state business which conducts any portion of its business within the state of California is potentially subject to the same overall taxation ... which led large online businesses to 'dump' California based affiliates. Thus avoiding potential California state taxes being leveed now involves the business entity, the business owner, and the 'customers' of that business, to all be located outside state borders.
As to S-Corp routing of 1099 income, if that income is paid in the name of the S-Corp then indeed the S-Corp has several options regarding the 'routing' of said income. It can be paid to the S-Corp shareholder(s) as a salary, which is fully taxable. It can be partially paid as a salary, and partially paid as a 'dividend', which ( for the moment at least ) is taxed at a lower rate. It can also be diverted into S-Corp owned investments which essentially creates a long term capital gain on value of S-Corp shares, which is both tax deferred and later taxed at a lower rate ( subject to changes in future tax law ).
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
Quote:
Originally Posted by
Spinnerette
I have a question and I've been researching to try to get a straight answer for the past few weeks now. Incorporating/setting up an LLC in another state is always suggested as a way to get around high income tax/having a bit more "privacy", but I've read a few things that say incorporating in one of the tax haven states while doing business in say, California (that's the example they use most because California milks small business owners), you would still owe taxes in the state you are physically present in/operating from. Now, I have no problem with that as I'm not trying to avoid paying state income tax on my earnings, but the then we get into this business of having to register as a "foreign entity" in one of the tax haven states, that being an additional fee/additional tax and yada yada yada where basically any benefit to doing it in the first place is null and void.
Some states do not have personal income taxes. The threshold for corporate taxation may be high enough to be of no concern. Have you consulted a CPA or tax attorney?
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
I know that some states do not have a personal income tax (Nevada) which is one of the supposed "perks" that has been reported for incorporating there, but it's useless if you're not a resident (as in, you still have to pay state income tax via the state you do business out of/are headquartered in). I was only using California as an example as that is the one that constantly comes up since setting up a business structure there has so many caveats. But I'm actually looking into incorporating in either Missouri, Minnesota, or Colorado (depends on where I settle in the next 6 months) so I'd have to pay income tax in those states, from what I've been told. So that means there are few to no benefits to registering an LLC in New Mexico, Wyoming, Delaware, or Nevada because registering in those states means that if I live in Colorado or whatever that I'd have to register my business as a foreign entity. That's extra paperwork/fees/evil complications that make incorporating in a tax haven state useless, from my understanding. I'm still not entirely clear.
And no, I have not consulted a CPA as I do not have a spare $300 at this time.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
How much is the fee for registering a foreign corporation? If you don’t have a spare $300 are you sure you need a tax shelter?
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
The fee for registering a foreign entity depends. $70-$250. That's just from a quick google search. I don't have a spare $300 NOW, but the point of incorporating is to make sure I'm able to allocate my money properly and hold on to as much of it as I legally can. So I'm researching tax shelters.
I don't know. The laws are changing little by little daily and that's most likely where I'm getting tripped up and confused. Apparently, you can't have anonymous officers in your LLC anymore (a benefit offered by New Mexico and some other state) because the IRS didn't like it. I have no clue. Think I might just go purchase "LLCs for Dummies" and give myself an aneurysm trying to understand all the jargon.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
If you are trying to remain anonymous you might check out some privacy law sites. If you hire a lawyer to do your incorporation, you could also have him (for a fee) be your registered agent, and keep your identity concealed as an attorney-client confidence.
Re: Forming a S corp to do taxes.!Could I hide my stripper identity from future emplo
Quote:
Originally Posted by
slowpoke
If you are trying to remain anonymous you might check out some privacy law sites. If you hire a lawyer to do your incorporation, you could also have him (for a fee) be your registered agent, and keep your identity concealed as an attorney-client confidence.
I will definitely look into this! Thank you!