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S-Corp/Employee Question

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  • S-Corp/Employee Question

    I'm schedule to begin practicing 3-4 days per week as an employee in January. I will also be moonlighting as independent contractor 1-2 days per week.

    I'm going to start working with a new accountant to help reconcile Quickbooks, perform payroll services, prepare Federal & State income tax returns, and personal tax returns, etc. I don't have a problem with fee's I would be charged. However, I'm concerned if it's even worth while b/c he has estimated his fee for the 2012 year at $4,000. I've estimated that I'll earn around $60,000-80,000 working as a IC for 2012. If his billing estimate is correct I would be paying almost 7% of my production income towards his services.

    I'm not complaining about his services or the estimated bill. I was paying that much last year when I earned 100% of my production income as a IC and earned much more $$$.

  • #2
    As an accountant, I can't really comment on the fees. Our fees tend to be on the higher side (California/state tax issues/higher cost of living here), and most of our clients are dentists/doctors, but I can't imagine an IC that works 1-2 days a week can have that much complication - we have several Schedule C clients who don't pay us near that much. Though admittedly, the fees for individual tax help can run the gammit - depends how complicated everything else is.

    Are you saying that you are a S corp. owner and will also be an employee? In that case, those fees are dirt cheap? The S corp would be the expensive part.

    I suppose my question is why you need the S Corp? That is probably the expensive part of the equation, and probably unnecessary? I'd ask your new accountant about that, for sure. I can't say from this exchange if you need it or not (or maybe even I misunderstand), but it is the question that comes to mind. Payroll and tax service for a dentist who works 1-2 days week and reports it on schedule C, should not be complicated or expensive, in comparison.

    Send me a private message if you like, but take free internet advice with a grain of salt. You are right though - the complication and tax filings are all the same even if you earn a fraction of the income. So kind of makes sense to me. I think this is why you are facing this, and that you are smart to question it. There may be a cheaper/better way to organize things. Also, you can look into outsourcing payroll. Payroll services are dirt cheap and you get what you pay for, but from a cost perspective we usually recommend them and then can just help our clients if they have problems. Just something I would ask new accountant what your alternatives are. We offer several options in regards to payroll, to keep accuracy high and costs down.
    Last edited by MonkeyMama; 01-01-2012, 08:54 AM.

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    • #3
      Thank you for your advice. I've expressed my concerns with my accountant and he's currently exploring more alternatives for my situation.

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