Told My First S Corp No

Thanks to this forum I had the confidence to tell an S Corp owner that I couldn't be involved with his stuff this year if he didn't want to start payroll ASAP. Nets north of 200K through an single EE S Corp and has never taken wages. Easy win for the IRS. Some on here have made me aware than when a client asks if they can start payroll at a later date it probably means they don't want to do it or will give push back when I tell them it's time to get it started next year.

You guys are the best!

As easy as it is to implement auto-pilot on Gusto or one of the other majors, he has no excuse.

One of the big three areas of perceived abuse the IRS is going to focusing on in the short-term is S Corp reasonable comp. And they just got an infusion of cash that will primarily be spent on examination, so I think your concern is valid.

Absolutely! He makes good money and could justify a lower wage as he is an employee recruiter and the salaries for Robert Half, the big name in the industry, are readily available. If he makes 300K before wages, he could pay himself an $80K salary and still save a good amount of money. Too each his own!

It's not just this business.... I remember a homebuilder, very successful, telling me he mailed the deposit check back to a customer saying they wouldn't sell him the home.

Legal aside, they cited that he violated the agreement. He walked the property daily, sent them comments about the progress, asked to use his plumbing contractor etc. They KNEW he would be a pain, so cut him loose. BUT, his words were similar to Warnicks. How liberating they felt saying NO.

I lost a client several years ago for the same reason, and I’m good with that. I just wish she would get audited so I could say “I told you so.” Way to stand your ground!

Cheers.

It took me a few years to learn how to say "no" (and how to say it politely).

Now I realize that when you say "yes" to someone like this, you are almost always saying no to someone else as a result anyway - and it is usually someone more deserving or more important to you.

What if you said yes, he was audited, and then the agent went through and scrutinized the remainder of your clients as a result? (thinking that you were possibly recommending aggressive W2 salaries for all of your clients, for example)

Not to mention several other areas of stress that will come up form these types.