Client interpretation of S-Corp - NT

[jasdlm]

Long time client was next in the queue, so I pick up her 'bag of bits' this morning, 16 March, and start going through it.  Inside, I find 1099s (box 7) and a list of expenses that say 'S-Corp'.  Hmmmm.  

Me:  "What is this 1099 income and this S-corp"?

Client:  "I started that because then you don't have to pay tax on all the income; only on what is reasonable.  Oh, and you can deduct your expenses."

Me:  "S-Corp tax returns were due yesterday."

Client:  "Oh, I don't want a different tax return.  You can just put it on my 'regular' return."

 

I'm so glad to have competent, well-informed, forward-thinking clients!

[Margaret CPA in OH]

Want to trade for my German and Aussie clients?

[jasdlm]

Well, if you put it that way, no thank you.  Honestly, I got lost just trying to read your post!  (You will notice there was no helpful comment from me.) 

[Abby Normal]

He deserves everything that's coming his way! Man, oh man. And I get mad at my clients for taking money out of retirement accounts without asking me the tax implications first.

Who was his accomplice? He doesn't sound smart enough to form a corporation and elect S status. Ask him for the 2553! And tell him you need the corporations bank statements for the year so you can put it in QuickBooks. make his bill thousands of dollars more than last year, then if he leaves, you've actually gained.

 

[JohnH]

Sounds like my client several years ago who said her son who was a sole proprietor had formed an LLC so he could save on taxes.  When I asked how, she said it Limits his Liability for taxes.  All he had to do was fill out this form and send it in to the Secretary of State with a $100 check.  My reply - "That's not how it works.  That's not how any of this works !"  

Thank God she didn't say he wants me to take him on as a client since I'd have said absolutely not.  Fortunately he was going to do his own tax filing, which was probably best all around. 

[RitaB]

Yeah, my proud new client set up a C-Corp all by himself and told three different taxing agencies three different names for it.  And I can see that he's paid everything from his personal account.

Me:  Why did you want to incorporate?

He:  I can't get sued.  And I can also have the Corporation buy a vehicle and write it off.

Me:  Do tell.  

Then the seminar where I was pretty unsympathetic and a little mean.  I think I said "if you're gonna be in business you need to act like it" more than once.  I had no interest in him being my client.  Well, ship, his wife said, "Thank you.  We are in the right place.  Tell us what to do."

Ship.

 

 

[jasdlm]

30 minutes ago, Abby Normal said:

Who was his accomplice? He doesn't sound smart enough to form a corporation and elect S status.  

 

Hair dresser and mechanic.  They share space and offer discounted advice - 2 for the price of 1 1/2.

[JohnH]

I used to say that of all the hair stylists I've ever been to, none ever offered me tax advice but most would ask for it.  Eventually I came to realize that most of them already knew the answer and they were probably just testing me to satisfy themselves that I really knew what I was talking about.