Please go easy on me. I started my first business 2 years ago and I've done it all on my own with absolutely no help. I thought I was doing things correctly until I recently realized I may not be paying myself the right way AT ALL. It's an S Corp and my CPA at that time set it all up for me. Basically, my understanding when I spoke to her was that if I have no employees, I can simply pay myself with a check and call it a day. So no W2 or anything. Just give myself a check and when I do my tax returns, she can report my income on Schedule K-1 of the 1120S forum (which I don't understand completely), and the profit there gets transferred to my personal 1040.
For tax year 2013, I ended at -$10,000 for the business (a lot on the startup/construction/etc.) so I actually got money back from the IRS when that transferred to my 1040.
For tax year 2014, I had a $60,000 profit on Schedule K-1, and that transferred onto my 1040. I had a different CPA this time and he also said no need to worry about not having any W2s or anything like that. But this time, I have to pay the IRS because of my profit. I set up an installment plan and got a letter from them agreeing to what I asked for under certain conditions. One of the conditions states: "You file on time all federal and state tax returns due during the term of this agreement. Federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year in one of three ways: Withholding, Estimated Tax Payments, and Federal Tax Deposits" and then it goes on to explain each of the different ways. So I have 2 questions:
1. Is the way my CPAs have instructed me to pay myself fine or incorrect?
2. Does that statement above from the IRS flat out mean that they have to see taxes coming in from me during whole I'm on this installment plan or else they can stop it? Or is that just a general statement they put stating that I have to pay taxes?
I appreciate any help I can get.
For tax year 2013, I ended at -$10,000 for the business (a lot on the startup/construction/etc.) so I actually got money back from the IRS when that transferred to my 1040.
For tax year 2014, I had a $60,000 profit on Schedule K-1, and that transferred onto my 1040. I had a different CPA this time and he also said no need to worry about not having any W2s or anything like that. But this time, I have to pay the IRS because of my profit. I set up an installment plan and got a letter from them agreeing to what I asked for under certain conditions. One of the conditions states: "You file on time all federal and state tax returns due during the term of this agreement. Federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year in one of three ways: Withholding, Estimated Tax Payments, and Federal Tax Deposits" and then it goes on to explain each of the different ways. So I have 2 questions:
1. Is the way my CPAs have instructed me to pay myself fine or incorrect?
2. Does that statement above from the IRS flat out mean that they have to see taxes coming in from me during whole I'm on this installment plan or else they can stop it? Or is that just a general statement they put stating that I have to pay taxes?
I appreciate any help I can get.
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