How to Transition from Being a Sole Proprietor and Eliminate your Self Employment Taxes

Presented by:Keith A. Haslem, CPA

801-235-9991pebpayroll@gmail.com

Keith A. Haslem Licensed CPA since 1985

Owner and operator of Professional Employer Benefits since 1996

The Purpose of this Website:

1. Provide some education regarding the risks and disadvantages of doing business as a sole proprietor and the advantages of doing business as an S-Corporation or LLC.

2. Illustrate how self employment taxes can be eliminated by electing to be taxed as an S-Corporation, whether you are doing business as a sole proprietor or as an LLC.

The Purpose of this Website:

3. Answer some questions that are commonly asked by a sole proprietor considering the transition to an S-corp or LLC.

4. Provide the resources needed to help you make the transition to being taxed as an S-Corporation.

What’s wrong with doing business as a sole proprietor?1. You are risking all your

personal assets in the event of a legal judgment

2. Being taxed as a sole proprietor carries a high tax burden

3. You label yourself as being not very astute

4. You create a disincentive for your customers to do business with you

“Which is better...a corporation or an LLC?”

It depends on your situation

Talk to a good attorney and/or CPA

Visit our zeroselfemploymenttaxes.com/videos to view video clips from attorneys and CPAs

“Where do the tax savings come from when using an S-corp?”

Hypothetical sole proprietor tax payer - George Bailey

SCHEDULE C(Form 1040)Department of the Treasurylnternal Revenue Service (99)

Name of proprietorGeorge Bailey (sole

Profit or Loss From Business(Sole ProPrietorshiP)

) For information on Schedule C and its instructions, go to www.irs.gov/schedulec.>Attach to Form 1040, 1040NR, or 1O41; partnerships generally must file Form 1065.

OMB No. 1545-0074

2@12AttachmentSequence No. 09

r.)Social security number (SSN)

1_23 - 45 - 6'7 89

D Employer lD number (ElN), (see instr.)

A Principal business or profession, including product or service (see instructions)Real Estate Aqent

C Business name. lf no separate business name, leave blank.UC Bai1y, LLCBusiness address (including suite or room no.) )' 123 Main StreetCity, town orpostoffice, state, and ZlPcode Orem, UT 84057

B Enter code from instructions>t1l1t2t9l0t0

F

GH

I

J

Accounting method: (1) R Cash (2) ! Accrual (3) ! Otner (specify) )Did you "materially participate" in the operation of this business during 2012? lf "No," see instructlons for limit on losseslfyoustartedoracquiredthisbusinessduring2012,checkhere>Did you make any payments in 2012 that would require you to file Form(s) '1099? (see instructions)lf "Yes,' did you or will you file required Forms 1 099? :

K%;-----N;TlYes ENolYes INo

80,000.

BO 000.

BO 000.

20,000.

20,000.60,000

60 000.

32a 8 All investment is at risk.32b n Some investment is not

at risk.

234567

lncomeGross receipts or sales. See instructions for line 1 and check the box if this income was reported to you onForm W-2 and the "Statutory employee" box on that form was checked >trReturns and allowances (see instructions)Subtract line 2 from line 1

Cost of goods sold (from line 42)Gross profit. Subtract line 4 from line 3Other income, including federal and state gasoline or fuel tax credit or refund (see instructions)Gross income. Add lines 5 and 6

Enter ses for business use your home on line 30.Advedising .

Car and truck expenses (seeinstructions).Commissions and feesContract labor (see instructions)

DepletionDepreciation and section 179expense deduction (notincluded in Part lll) (see

ExB

I1011

'1213

'14 Employee benefit programs(other than on line 19) .

15 lnsurance (other than health)16 lnterest:

a Modgage (paid to banks, etc.)

b OtherLeqal and professional services't7

28293031

Total expenses before expenses for business use of home. Add lines 8 through 27aTentative profit or (loss). Subtract line 28 from line 7

Expenses for business use of your home. Attach Form 8829. Do not repod such expenses elsewhereNet profit or (loss). Subtract line 30 from line 29.. lf a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2.

(lf you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3.. lf a ioss, you must go to line 32.lf you have a loss, check the box that describes your investment in this activity (see instructions).. lf you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) andon Schedule SE, line 2. (lf you checked the box on line 1, see the line 31 instructions). Estates andtrusts, enter on Form 104'1, line 3.. lf vou checked 32b, vou must attach Form 6198. Your loss may be limited.

32

18 Office expense (see instructions)19 Pension and profit-sharing plans

20 Rent or lease (see instructions):a Vehicles, machinery, and equipmentb Other business property

21 Repairs and maintenance22 Supplies (not included in Part lll)23 Taxes and licenses24 Travel, meals, and entertainment:

a Travel.b Deductible meals and

entertainment (see instructions)25 Utilities26 Wages (less employment credits) .

27a Other expenses (from line 48) .

b Reserved for future use

For Paperwork Reduction Act Notice, see your tax return instructions. BAA REV 01/04/13 TTW Schedule C (Form 1O4Ol 2012

Schedule C (Form 1 040) 201 2 Page2Cost of Goods Sold see nstr

33

34

Method(s) used tovalue closing inventory: a ! Cost b ! Lower of cost or market c E Other (attachWas there any change in determining quantities, costs, or valuations between opening and closing inventory?lf "Yes," attach explanation

lnventory at beginning of year. lf different from last year's closing inventory, attach explanation

Purchases less cost of items withdrawn for personal use

Cost of labor. Do not include any amounts paid to yourself .

explanation)

n Yes XNo

35

36

37

38 Materials and supplies

39 Other costs

40 Add lines 35 through 39

41 lnventory at end of year

42 Cost of sold. Subtract line 41 from line 40. Enter the result here and on line 4 .

f nformation on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line Iand are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you mustfile Form 4562.

43

44

Whendidyouplaceyourvehicleinserviceforbusinesspurposes?(month,day,yea0>

Of the total number of miles you drove your vehicle during 2012, enter the number of miles you used your vehicle for:

6 Business b Commuting (see instructions) c Other

45 Was your vehicle available for personal use during off-duty hours? [ Yes I No

46 Doyou(oryourspouse)haveanothervehicleavailableforpersonaluse?. ! Yes I No

47a Do you have evidence to support your deduction? [ Yes n No

b lf "Yes," is the evidence written? [ Yes X NoOther E . List below business ses not included on lines 8-26 or line 30.

General and Administrative

Y-q-r-r-< 9 ! i rs_ ETp e +E-eF-

20,000.48 Total other Enter here and on line 27a

REV 01/04/13 TTW Schedule C (Form 1O4Ol2012

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SCHEDULE SE(Form 1040)

Depadment of the TreasuryInternal Revenue Service

Self-Employment Tax) lnformation about Schedule SE and its separate instructions is atwww.irs.govlforml040,

)Attach to Form 1040 or Form 1040NR.Name of person with self-employment income (as shown on Form 1040)

Georqe Bailey (so1e propr.

O[,48 No. 1545-0074

2@12AttachmentSequence No. I 7

L23-45-6789Social security number of personwith self-employment income )

Before you begin: To determine if you must f ile Schedule SE, see the instructions.

May I Use Short Schedule SE or Must I Use Long Schedule SE?

Note. Use this flowchart only if you must file Schedule SE. lf unsure, see Who Must File Schedule SF in the instructions.

Did you receive wages or tips in 2012?

Was the total of your wages and tips subject to social securityor railroad retirement (tier 1) tax plus your net earnings fromself-employment more than $1 10,100?

Are you a minister, member of a religious order, or ChristianScience practitioner who received IRS approval not to be taxedon earnings from these sources, but you owe self-empioymenttax on other earnings?

Are you using one of the optional methods to figure your netearnings (see instructions)?

Did you receive tips subject to social security or Medicare taxthat you did not repod to your employer?

Did you repod any wages on Form 8919, Uncollected SocialSecurity and Medicare Tax on Wages?Did you receive church employee income (see instructjons)

reported on Form W-2 of $108.28 or more?

You must use Long Schedule SE on page 2You may use Short Schedule SE below

Section A-Short Schedule SE. Caution. Read above to see if you can use Short Schedule SE.

1a Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form1 065), box 1 4, code A .

b lf you received social security retirement or disability benefits, enter the amount of Conservation ReserveProgram payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code Y

2 Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065),box 14, code A (other than farming); and Schedule K-1 (Form 1065-8), box 9, code J1.Ministers and members of religious orders, see instructions for types of income to report onthis line. See instructions for other income to reportCombine lines 1a, 1b, and 2Multiply line 3 by 92.35% (.9235). lf less than $400, you do not owe self-employment tax; donotfilethisscheduleunlessyouhaveanamountonline1b.>Note. lf line 4 is less than $+OO due to Conservation Reserve Program payments on line.l b,seeinstructions',ihoamnrrnrnnrinadic. J5, 3 q., n z6^t3 ^n / 1Self-employment tax. If the amoun\o7 tine 4 is. t-c-;i r, iJ. $110,100 or less, multiply line 4 by 1qP% (.133). Enter the result here and on Form'1040, line 56,or Form 1O4ONR, line 54 ,l. More than $1 10,100, multiply lind4 by 2.9% (.029). Then, add $1 1,450.40 to the result.Enter the total here and on Form 1040, line 56, or Form 1040NR, line 54.Deduction for employer-equivalent portion of self-employment tax.lf the amount on line 5 is:. $14,643.30 or less, multiply line 5 by 57 .51% (.5751), More than $14,643.30, multiply line 5 by 50% (.50) and add$1 ,1 00 to the result.Enter the result here and on Form 1040, line 27, or Form1040NR, line 27

60,000.60,000.

55,410.

For Paperwork Reduction Act Notice, see your tax return instructions. g44 REV 11l13/12 TTW

4,815.Schedule SE (Form 1O4Ol 2012

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F I 040 U:U:"ilT:i,iffit ffi1#TT"i"*",J',ii 2@12For the year Jan. 1 -Dec. 3 1 , 201 2, or other tax year beginning ,2012, endingYour first name and

Georgea Joint return, spouse's t name and inil

MarHome address (number and street).

123 Mainstreetlf you have a P.O. box, see instructions.

City, town or posl office, state, code. lf you have a address, also complete spaces (see instruclions).

Orem UT B4O5lForeiqn country name

OMB No. 1545-0074 IRS Use Only-Do not write or staple ;n this space

separate instructions.Your social security number

r23-45-6789number

234 - 56 -7 B9r

,n

^ ilf#ffi:1""';)fli:]"

Filing Status

Check only onebox.

1 I Single2 X Married filing jointly (even if only one had income)3 I Married filing separately. Enter spouse's SSN above

and full name here. )

Presidential Election CampaignCheck here if you, or your spouse if filingiointly, wanl $3 to go to tl'.s fund. Check rga box below will not change your tax orre{und. You | | Spouse

n leaO o{ household (with qualifying person). (See instructions.) lfthe qualifying person is a child but not your dependent, enter thischild's name here. )

5 [ Qualifying widow(er) with dependent child

Last name

Bailey (sole propr. )Last name

Bai 1 ey

Exemptions

lf more than fourdependents, seeinstructions andcheck here l' n

lncome

Attach Form(s)W-2 here. Alsoattach FormsW-2G and1099-R if taxwas withheld,

lf you did notget a W-2,see instructions.

Enclose, but donot attach, anypayment. Also,please useForm 1040-V.

AdjustedGrosslncome

6a K Yourself. lf someone can claim you as a dependent, do not check box 6abK

(4) / if child under age 17qualitying for child tax credil

(see instructions)

Boxes checkedon 6a and 6bNo, of childrenon 6c who:. lived with you. did not live withyou due to divorceor separation(see instructions)Dependents on 6cnot entered above

Add numbers onlines above )

2

c Dependents:First name Last name

TTT

Wages, salaries, tips, etc. Attach Form(s) W-2Taxable interest. Attach Schedule B if requiredTax-exempt interest. Do not include on line 8aOrdinary dividends. Attach Schedule B if requiredQualified dividends

't0 Taxable refunds, credits, or offsets of state and local income taxes11 Alimony received12 Business income or (loss). Attach Schedule C or C-EZl3 Capital gain or (loss). Attach Schedule D if required. lf not required, check here ) n14 Other gains or (losses). Attach Form 4797 .

78a

b9a

b

8b

9b

15a lRAdistributions lrsul I loTaxableamoLrnt1Ga Pensionsandannuities m b raxableamount17

181920a2'l22

Schedule ERental real estate, royalties, parlnerships,Farm income or (loss). Attach Schedule F

S corporations, trusts, etc. Attach

Unemployment compensationSocial security Oenetits I ZOa I i luTaxableamountOther income. List type and amountCombine the amounts in the far right column for lines 7 through 21. This is your total income

23 Educator expenses24 Certain business expenses of reservists, perlorming artists, and

fee-basis government officials. Attach Form 21 06 or 2106-EZ

25 Health savings account deduction. Attach Form 888926 Moving expenses. Attach Form 390327 Deductible part of self-employment tax. Attach Schedule SE

28 Self-employed SEP, SIMPLE, and qualified plans29 Self-employed health insurance deduction30 Penalty on early withdrawal of savings .

31a Alimony paid b Recipient's SSN >_32 IRA deduction33 Student loan interest deduction .

34 Tuition and fees. Attach Form 8917 .

35 Domestic production activities deduction. Attach Form 890336 Add lines 23 through 3537 Subtract line 36 from line 22. This is your adjusted gross income

(2) Dependent'ssocial security number

d Total number of exemptions claimed

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. 64g REV o2l07/13 rrw Qa12)

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40207

1555

Utah lndividual lncome Tax ReturnAll State Income Tax Dollars Fund Education

. Amended Return - enter code

BAILEY (SOLE PROPR. )

BAILEY

uT 84057

2012TC-40

Your Soc. Sec. No.L234567 89Spouse's SSN

234567 89r

GEORGE

MARY

I23 MAIN STREET

OREM

Filing Status - enter code1 = Single

2 2 = Married filing jointly3 = Married filing separately4 = Head of household5 = Qualifying widow(er)

4 Federal adjusted gross income from federal return

5 Additions to income from TC-40A, Part 1 (attach TC-40A, page '1 )

6 Total income - add line 4 and line 5

7 State tax refund included on federal form 1040, Iine 10, if any

B Subtractions from income from TC-40A, Part 2 (attach TC-40A, page .l)

9 Utah taxable income (loss) - subtract the total of lines 7 and B from Iine 6

1 0 Utah tax - multiply line 9 by 5% (.05) (not less than zero)

1 1 Exemption amount - multiply line 2e by $2,850

1 2 Standard or itemized deductions used on federal return

1 3 Add line 1 1 and line 12

1 4 State income tax deducted on federal Schedule A, line 5, if any (see instr.)

1 5 Subtract line 14 from line 13

.1 6 lnitial credit before phase-out - multiply line 15 by6% (.06)

1 7 Enter amount based on filing status: if line 1 equals I or 3, enter $13,029;if line .1 equals 4, enter $19,543; if line 1 equals 2 or 5, enter $26,058

1 B Income subject to phase-out - subtract line 17 from line 9 (not less than zero)

1 9 Phase-out amount - multiply line 18 by 1.3% (.013)

2 0 Taxpayer tax credit - subtract line .l g from line 16 (not less than zero)

2 1 lf you are a qualified exempt taxpayer, enter "X" (complete worksheet)

2 2 Utah income tax - subtract line 20 from line '10 (not less than zero)

Rev 11t27t12rIW

Election Campaign Fund - enler codeA = AmeriCanS EleCt Yourselt Spouse

C=Constitution . .D= Democratic L= LibertarianG = GreenJ = Justice

R = RepublicanN = No contribution

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12

14

15

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17

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5700.

11900.

17600.

L1600.

1056.

26058.

29067 .

378.o 20 618

. 2 Exemptions - enter numbera 1 Yoursel{ Ib 1 Spouse I trom {ederal returnc Dependents Jd Dependents with a disability (see instr.)e 2 Total exemptions (add a through d)

Filingelectronically

is quick, easy andfree, and willsPeed uP your

refund.

To learn more,go to

taxexpress.utah.gov

.21

.22 20'7I

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Hypothetical tax payer George Bailey as an S-corp

ro'.'" 1 120SDepartment of the Treasurylnternal Revenue Seryice

OMB No. 1545-0130

2012U.S. lncome Tax Return for an S Corporation

> Do not file this form unless the corporation has filed or isattaching Form 2553 to elect to be an S corporation.> lnformation about Form 1 120S and its separate instructions is at www.

on electinq to be an S corporation beqinninq with this tax year'/ p( | Yes | | r\o

1r1 liinarreturn (2) l-lryg1ne change 1s; f,noores"s cr'ar(4) f Amended return til lS election terrnination or revocation

I Enter the number of shareholders who were shareholders during any part of the tax year . > 1

Caution. lnclude only trade or business income and expenses on lines 1a through 21. See the instructions for more information

For calendar vear 2012 or tax vear .2012.A S election effective date

0r/0r/12 TYPEORPRINT

Name

ceorse Bailev, LLCP Employer identification number

12 -3456789B Business aciivity code

number (see instrs)53 1210

Number, street, and room or suite no. lf a P.O. box, see instructions

123 Main SLreetDate incorporated

0r/0r/12C Check if Schedlle -l

l\.4-3 attached L lCity or town, state. and ZIP code

Orem UT 84057F Total assets (see instructions)

$ s, oooG ls the corDoration electino to be an S c(,_v

H Check if: (1) | lFinal returnrrporation beqinning with this tax year? El Yes No lf 'Yes,' attach Form 2553 if not already filed

(2) I lrl"r" change (3) change

INcoME

laGrossreceiptsorsales ....1 1al 80,000.b Returnsand allowances fc Balance. Subtract line 1b from line 1a

2 Cost of goods sold (attach Form 1 '125-A)

3 Gross profit. Subtract line 2 from line 1c4 Net gain (loss) from Form 4797,line 17 (attach Form 4797).5 Other income (loss) (see lnstrs - att statenent)6Totaiincome(loss)'Add|ineS3throuqh5.>

iliit:!ti:i:;i

i"2

3456

DEDucTIoNs

EE

INsTRs

7 Compensation of officersI Salaries and wages (less employment credits)9 Repairs and maintenance

10 Bad debts11 Rents12 Taxes and licenses.13 lnterest.14 Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562)15 Depletion (Do not deduct oil and gas depletion.)16 Advertising17 Pension, profit-sharing, etc, plans18 Employee benefit programs19 Otherdeductions (attach statement) . . . . : .STMT .

20 Total deductions. Add lines 7 through 1921 Ordinarv business income (loss). Subtract line 20 from line 6 . '

78I

1011

1213'1415161718't92021

TAX

AND

PA

MENTs

22a Excess net passive income or LIFO recapturetax (see instructions)

b Tax from Schedule D (Form 1 120S)c Add lines 22aand22b (see instructions for additional taxes).

23a 2012 estimated tax payments and 2011 overpayment credited to 2012b Tax deposited with Form 7004 . .

c Credit for federal tax paid on fuels (attach Form 4136) .

d Add lines 23a through 23c . .

24 Estimated tax penalty (see instructions). Check if Form 2220 is attached25 Amount owed. lf line 23d is smaller than the total 0f lines 22c and 24, enter amount owed . . ' .

26 Overpayment. lf line 23d is larger than the total of lines 22c and 24, enter amount overpaid27EnteramoUntfromline26Creditedto2013estimatedtax> Refunded >

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SignHere

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,correct, and compl6te. D6claraiion ol preparer (other than taxpayer) is based bn all information of which preparer has any knowledge.

)l' Signature of offlcer DateL- Mav the IRS dlscuss this return

with the oreoarer shown below(see instiuctions)?' lv". l-lruo

PaidPreparerUse Only

Print/Type preparer's name Preparer's signature Date check [l ir PTIN

Fi.msname > Self-P:epa::eCFirm's address

Fim's EtN )

Phone no.

BAA For Paperwork Reduction Act Notice, see separate instructions. SPSAo1 12 12130/12 Form 1120S (2012)

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Schedule K-l 2012 ! Finatr-l I Amended K-1

BAA For Paperwork Reduction Act Notice, see lnstructions for Form 1120s.

t7l,l,l,eOl,4B No. 1545-0130

(Form 1120S)Department of the Treasurylnternal Revenue Setuice

For calendar yeat 2012

year beginning

or lax

,2012ending

Shareholder's Share of lncome, Deductions,CfeditS, etC > See page 2 of form and separate instructions.

lllrPailrltl':l Shareholder's Share rf Current Year Income,

1 Ordinary business income (loss)26 .86E

13 Credits

2 Net rental real estate income (loss)

3 Other net rentai income (loss)

lnformation About the Corporation4 lnterest income

A Corporation'semployeridentification number1,2 -34567 89 5a Ordinary dividends

B Corporation's name, address, city, state, and Zlp codeGeorge Bailey, LLC123 Main StreetOrem. UT 84057

5b Qualified dividends 14 Foreign transactions

b Royalties

7 Net short-term capital gain (loss)C IRS Center where corporation fiied return

Ogden, UT 84207-00i3 8a Net longterm capital gain (loss)

lnformation About the Shareholder8b Collectibles (28%) gain (loss)

D Shareholder's identifying numberI23-45-6789 8c Jnrecaptured section 1250 gain

E Shareholder's name, address, city, state, and Zlp codeGeorge Bail-ey123 Main StreetOrem, UT 84057

9 Net section 1231 gain (loss)

10 Other income (loss) 15 Alternative minimum tax (AMT) items

F Shareholder's percentage of stockownershipfortaxyear. 100.00000 ?

FoR

I

RS

USE

oNLY

1'l lection 179 deduction 16

Dtems affecting shareholder basis

30.00012 )ther deductions

7 )ther information

*See attached statement for additional information.

sPsA0412 12127n2

lRS.gov/forml'120s Schedule K-1 (Form 11205)2012

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F 1 o4o i;:u:"il;;il;ili ffiTlffiTT"i"*"*,i??l 2@12 OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space

separate instructions.For the year Jan. 1 -Dec. 3 1, 201 2. or olher tax year beginningYour firsi name and initial

Geoa Joint return, spouse's

MaryHome address (number and street). lf you have a

123 Main Streettown or post office, state, and

Orem UT 84457Foreign counlry name

Filing Status

Check only onebox.

name and initial

,2012, ending ,20

4n

Your social security number

r23-45-5789social security

234 - 56 -'t 897

1

23

XI

box, see instructions.

you have a address. also

SingleMarried filing jointly (even if only one had income)Married filing separately. Enter spouse's SSN aboveand full name here. )

a Make sure the ssN(s) abovel and on line 6c are correct.

Presidential Election campaignCheck here il you, or your spouse if filingjointly, want $3 to go to this frnd. Check'nga box below will not change your tax orrelund. You I I Spouse

Head of household (with qualilying person). (See insttuctions.) lfthe qualifying person is a child but not your dependent, enter thischild's name here. )

Last name

Bailey- LLC OwnerLast name

Barle

Qualifying widow(er) with dependent child

Exemptions

lf more than fourdependents, seeinstructions andcheck here ) X

lncome

Attach Form(s)W-2 here. Alsoattach FormsW-2G and1099-R il taxwas withheld.

lf you did notget a W-2,see instructions.

Enclose, but donot attach, anypayment. Also,please useForm 1040-V.

AdjustedGrosslncome

c Dependents:(1) First name Last name

(4) / if child under age 17qualilying lor child tax credit

(see instructions)

Boxes checkedon 6a and 6bNo. of childrenon 6c who:. lived with you. did not live withyou due to divorceor separation(see instructions)Dependents on 6cnot entered above

Add numbers onlines above )

6a Yourself. lf someone can claim you as a dependent, do not check box 6abx 2

7

8ab

9ab

Wages, salaries, tips, etc. Attach Form(s) W-2Taxable interest. Attach Schedule B if requiredTax-exempt interest. Do not include on line 8a 8b

9bOrdinary dividends. AtQualified dividends

tach Schedule B if required

10 Taxable refunds, credits, or offsets of state and local income taxes11 Alimony received12 Business income or (loss). Attach Schedule C or C-EZ13 Capital gain or (loss). Attach Schedule D if required. lf not required, check here ) tr14 Other gains or (losses). Attach Form 4797 .

15a lRAdistributions lrs"l I luTaxableamountl6a pensions and annuities ffi b raxable amount17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E

18 Farm income or (loss). Attach Schedule F .

19 Unemploymentcompensation2oa Social security benelits | 20a i I luTaxableamount21 Other income. List type and amount22 Combine the amounts in the far right column for lines 7 through 21. This is your total income )23 Educator expenses24 Certain business expenses of reservists, performing artists, and

fee-basis government officials. Attach Form 21 06 or 2106-EZ

25 Health savings account deduction. Attach Form 888926 Moving expenses. Attach Form 390327 Deductible part of self-employment tax. Attach Schedule SE

28 Self-employed SEP, SIMPLE, and qualified plans29 Self-employed health insurance deduction30 Penalty on early withdrawal of savings .

31a Alimony paid b Recipient's SSN >_32 IRA deduction33 Student loan interest deduction .

34 Tuition and fees. Attach Form 8917.35 Domestic production activities deduction. Atiach Form 890336 Add lines 23 through 3537Subtractline36fromline22.Thisisvouradjustedgrossincome>

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How much would I save being taxed as an S-corp?

Download this Excel spreadsheet and project your own tax savings at zeroselfemploymenttaxes.com/resources

“I’m already doing business as an LLC... Am I good...?”

Yes, IF you’ve made the election to be taxed as an S-corp.

If line 56 on your personal tax return is not zero, you haven’t made the election.

“Do I really need to worry about being sued if I do business as a

sole proprietor?”As a sole proprietor you could lose all your personal assets and part of your future income to pay a legal judgment.

As an S-corp or LLC your loss would be limited to the assets owned by your business.

zeroselfemploymenttaxes.com/videos contains clips from attorneys discussing this risk.

“What are the disadvantages of forming an S-corp or LLC?”1. Necessity of paying yourself a "reasonable salary"

2. Filing an 1120 S tax return

3. Regulatory requirements (go to zeroselfemploymenttaxes.com/videos for short videos from attorneys regarding regulatory requirements)

“Can I use the same business name I use now?”

Yes, by filing “Articles of Conversion”.

Go to zeroselfemploymenttaxes.com/resources to get the “Articles of Conversion” form.

“Do I need to wait until the new year to make the

transitions to an S-corp?”

No. You can start an LLC or S-corp any time.

“What will it cost me to form an LLC or S-corp”

That depends on whether you use an attorney and a CPA to help you in the process.

Most attorneys charge between $500 and $700.

zeroselfemploymenttaxes.com/videos contains video clips from several attorneys outlining their services and their pricing.

If referred by Keith Haslem, these attorneys are willing to offer a discount on their normal pricing.

zeroselfemploymenttaxes.com/resources provides a link that enables you to form a new entity without the assistance of an attorney.

“What are the steps in the process of forming an S-corp?”

“What services do you provide?”We would like to be your payroll administrator.

Being taxed as an S-corp means you need to pay yourself a reasonable salary.

You can run your own payroll using Quickbooks but that will cost you $28 per month,

or...

You can outsource payroll administration to Professional Employer Benefits for as little as $38 per month and you’ll never have to:

-prepare payroll checks -prepare checks to benefits or retirement plan vendors -make monthly federal tax deposits -prepare quarterly payroll tax returns to IRS, Utah State Tax Commission, Department of Workforce Services -prepare year end payroll tax returns to IRS, Utah State Tax Commission, Social Security Administration -prepare W-2 's -deal with Workers Compensation insurance claims or audits. -respond to inquiries from governmental agencies or lending companies regarding payroll information

Go to www.PEBpayroll.com for a more detailed description of our services

For more information or to get started on the process of forming an LLC or S-corp, contact Keith Haslem by phone or email.

Contact Information:Keith Haslem, CPAProfessional Employer BenefitsEmail - pebpayroll@gmail.comOffice - 801.235.9991Cell - 801.358.3699Fax - 801.235.9993

360 W. 920 N.Orem, UT 84057

www.zeroselfemploymenttaxes.com