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Open Roads Forum  >  Beginning RVing

 > Full Time RV living as a S Corp/1099 employee

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Grit dog

Black Diamond, WA

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Posted: 10/23/21 09:39am Link  |  Quote  |  Print  |  Notify Moderator

While not a tax expert, I’m not understanding the advantage of a S Corp vs full time employee taking the same “business expense” deductions. Unless you can’t establish a “residency” for tax purposes and deductions for traveling away from your resident or tax state.
Therein may be the difference? Not legal to establish residency location if truly FT on the road.
That’s the one advantage I could see. Because business expenses for traveling for work , just the standard deductions, are quite liberal and pay well.
I’ve had several years where standard meal and room and board deductions resulted in a refund of a good chunk of federal tax paid in.


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valhalla360

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Posted: 10/23/21 10:41am Link  |  Quote  |  Print  |  Notify Moderator

weinstein_josh wrote:

First post here so thanks for any and all opinions/comments!

Long story short, I have the opportunity to sell my home and buy an RV to go travel full time while working in a virtual job. Timeframe is within the next 4-8 months. My employer is very open to the idea as we have clients nationally that need our attention, so I can plan my travel routes around our clients/needs. I have a few connections with good accountants (past employment) and have already begun opening discussions with them about how to arrange this to maximize expenses, taxes, income, etc

I have a meeting lined up on 10/25 to discuss more in depth, but thus far I have spoken to my FL accountant who suggested establishing a corporation (most likely S Corp) with a FL address and then approach my employer to discuss becoming a 1099 employee paid to my corporation.

My main questions and interest with this post center around others who may have done this and have some experience in the process as far as things to consider. Please feel free to comment and share if you have been in a similar situation or know others who may have done something like this.


Is your employer against you remaining an employee? That could simplify a lot of it unless you can legitimately claim a lot of expenses...be careful of the rules separating home and office.

As mentioned, if there is negligible liability, skipping the corp and just doing the 1099 is a simple solution. The question for your accountant should be what does a corp provide you.


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Timmo!

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Posted: 10/23/21 10:44am Link  |  Quote  |  Print  |  Notify Moderator

I think you might determine exactly what your objectives are before doing anything else.

In my prior life, I can't count the number of times I found myself facing a client that wanted to employ a complex solution (one their buddy used) to respond to a simple problem.

Can you form an entity (NewCo, Inc) that will provide your personal services to clients/customers? Yes. Manufacturer's reps do this all the time.

Will payments to NewCo, Inc. be reported on Form 1099Misc? No, only payments made to individuals (and their DBA) totaling $600 or more are reported on Form 1099Misc. Payments to S-Corps, C-Corps, Partnerships, and Trusts are NOT reported on Form 1099Misc.

If NewCo, Inc. is based in Florida can an employee (you) represent NewCo, Inc. in other states? Yes and no. Regulations in other states may require licensing, registering, and even taxation of the business conducted within their state.

If you conduct all your business online does that change things? Yes, not having a physical presence in other states can be key in avoiding jurisdiction of other states--mandating you to be licensed, registered and taxed in their state.

Can you avoid paying self-employment tax or Social Security tax (FICA) on payments made to you individually? Yes and no. It depends on the entity type and characterization of the payments.

Are dividend payments from retained earnings paid by a S-Corporation double taxed? Not really. Subject to FICA tax? No.

....paid by a C-Corporation double taxed? Usually yes. Subject to FICA tax? No.

Are profits paid by a partnership to the general partners subject to self-employment tax? Yes if the general partner is an individual. Usually no if the general partner is another entity.

Are profits paid by a partnership to a Limited Partner subject to self-employment tax? Never.

Can a S-Corporation be a partner in a partnership? Yes.

Can a partnership be a shareholder in a S-Corporation? No.

Can a partnership be a shareholder in a C-Corporation? Yes.

Allworth

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Posted: 10/24/21 01:32pm Link  |  Quote  |  Print  |  Notify Moderator

Look up "Enrolled Agent".

Then, avoid internet advice.


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NamMedevac 70

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Posted: 10/24/21 01:56pm Link  |  Quote  |  Print  |  Notify Moderator

Allworth wrote:

Look up "Enrolled Agent".

Then, avoid internet advice.


He or She has received some very good internet advice from me and others and that is to consult with or stick with his accountant for financial advice, etc. From former registered SEC CFP, Financial and Tax Accountant. Cheers

Timmo!

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Posted: 10/25/21 08:26am Link  |  Quote  |  Print  |  Notify Moderator

Yep, and those with "experience" on such matters offer "wisdom". Wisdom = knowledge (knowing) + experience (doing).

weinstein_josh

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Posted: 10/25/21 11:10am Link  |  Quote  |  Print  |  Notify Moderator

monkey44 wrote:

YOU can become a 1099 subcontractor without the expense of S Corp ... The main reason for establishing an S Corp, or LLC would mostly be liability. They are similar, altho basically, an S Corp is a tax strategy, LLC also limits personal liability.

If you have no liability exposure in your job, less reason to establish one. I was a 1099 Sub for years, and found no tax advantage to establishing an S Corp or an LLC ... only a liability advantage, especially if you have employees or 'assistants' ... if not, you are increasing your overhead costs. I'd weigh those costs versus the costs of operating as an independent subcontractor.

I'm not an attorney nor an accountant, but my experience is based on operating three 'freelance' companies over past forty years.

Tax and liability laws may be different now, but it never made sense for me to file taxes, pay accountants, and carry overhead for a company when I was the only 1099 Sub in my world - and operated independently for several 'employers' ...

Pay can be piece work, contract fees, or hourly - never mattered.

Recently, the Feds - and some states - are trying to eliminate freelance workers. I believe that's mainly to increase employment taxes to the state, not necessarily to assist freelancers ...

CA and FL (maybe other states ??) attempted to force Uber and Lift drivers, writers, photographers, artists, to become employees instead of subcontractors, which would severely limit the ability for drivers or artists to create a personal work schedule around college, training, or family issues. The Feds and state argue that if you have only ONE employer, you are not freelance ... as debatable as that might become over who pays your tab.

The question and example arose: How does a wedding photographer become an employee for every bride and groom that hires him/her for a wedding and reception.


I would have no liability exposure with my job and what I'm doing. Also would be the only employee, no subs or assistants.

weinstein_josh

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Posted: 10/25/21 11:11am Link  |  Quote  |  Print  |  Notify Moderator

Dutch_12078 wrote:

Would you be losing any employer paid benefits?


I would lose health insurance so would have to go to open market to purchase that, though I rarely use it and have an HSA from previous employer with some decent funds available.

weinstein_josh

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Posted: 10/25/21 11:14am Link  |  Quote  |  Print  |  Notify Moderator

NamMedevac 70 wrote:

Although retired pilot I am also former Financial and Tax accountant that specialized in small business S corporations many years ago. The IRS rules governing S corporations often change and YOUR ACCOUNTANT should be current on all the current requirements. There are pros and cons regarding S Corporations and their passive income pass thru/on methods. As a traveling RVer you may need to be aware of different states regulations and filing requirements for small business operations.

Today there are even many more additional rules, regulations everywhere.

Nevada HP sometimes ask RVers with out of state plates if you are working or conducting any type of commercial business in Nevada. I have now been resident and RVer in Nevada many years. Stick with an accountant. This info may be useful to others. Cheers


So you're saying that even though I have a home based address/registration say in FL, if I do work in any other state (being compensated as a 1099 from my own corporation), it would be subject to that states income tax laws?

weinstein_josh

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Posted: 10/25/21 11:16am Link  |  Quote  |  Print  |  Notify Moderator

valhalla360 wrote:


Is your employer against you remaining an employee? That could simplify a lot of it unless you can legitimately claim a lot of expenses...be careful of the rules separating home and office.

As mentioned, if there is negligible liability, skipping the corp and just doing the 1099 is a simple solution. The question for your accountant should be what does a corp provide you.


No my employer would allow me to stay on as a full time employee. I haven't yet approached them about 1099 as I was trying to do due diligence and meet with accountants to figure out what would be best in this scenario.

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