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S corp sole owner: Can I pay myself as 1099 or must I pay as w-2 employee?

Hello,
I was granted S corp status in March 2008. Due to an accident, I have not worked consistently, and at best have only earned 10,000 as an S corporation. I have not setup payroll because I am not sure how to pay myself. I want to go the 1099 route because that was the way I was working before I incorporated. However, as an I.T. consultant, most of my work comes through other companies who pay me corp to corp. Bottom line can I pay myself with 1099 or must I pay W-2?

Thanks,
Melanie

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W-2 for S-Corp Officer-Shareholders

Hi Melanie,

If you're an officer & shareholder, which you are if you're the only owner of the S-Corp, then are an employee of the S-Corp. When you pay yourself it should only be via W-2 wages or distributions. Payment for services should be reported as W-2 wages.

Besides, paying yourself 1099 eliminates 99% of the tax advantages of creating the S-corp in the first place. :)

L:)

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