pass-through billing via S-Corp


G

ge

I have two sources of income: consulting work that I do (as
a a sole proprietor) for an out-of-state company, and
distributions from an S-Corp (I am part-owner), which
receives royalties from sales of a product that we designed.

I have a possibility of getting some other consulting work,
in this state (NY). However, this customer says that NYS is
very aggressive WRT worker's comp: that MY audits the
company's vendor payments, and, for payments to individuals,
requires that the company pay worker's comp for that person
- ie, that the person is "an employee for purposes of
worker's comp."

To avoid this, the customer would like to make payments to a
corp. Can I do this through the (existing) S-Corp? That is,
invoice the S-Corp in my name, and then have the S-Corp
invoice the customer 'corporately'. Payments would be
expensed to me, and I would pay, and would show up on my
schedule C.

So, all taxes would be paid, the S-Corp wouldn't be harmed,
and the worker's comp charges would be avoided?

TIA,
George
 
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H

Harlan Lunsford

ge said:
I have two sources of income: consulting work that I do (as
a a sole proprietor) for an out-of-state company, and
distributions from an S-Corp (I am part-owner), which
receives royalties from sales of a product that we designed.

I have a possibility of getting some other consulting work,
in this state (NY). However, this customer says that NYS is
very aggressive WRT worker's comp: that MY audits the
company's vendor payments, and, for payments to individuals,
requires that the company pay worker's comp for that person
- ie, that the person is "an employee for purposes of
worker's comp."

To avoid this, the customer would like to make payments to a
corp. Can I do this through the (existing) S-Corp? That is,
invoice the S-Corp in my name, and then have the S-Corp
invoice the customer 'corporately'. Payments would be
expensed to me, and I would pay, and would show up on my
schedule C.

So, all taxes would be paid, the S-Corp wouldn't be harmed,
and the worker's comp charges would be avoided?
Yes, you can do that.

However, to be squeaky clean about it, make sure the
corporation pays you with applicable withholding taxes, thus
treating you as an employee, and not as a subcontractor.

Cheer$,
Harlan Lunsford, EA n LA
 

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