Go to Jeff Salisbury LWGate Home Page.From: David Stanowski <DavidStanowski@compuserve.com>
Subject: Tax Questions
Date: Tue, 9 Mar 1999 01:27:58 -0500
Previous Article (by Date): Re: Roth IRA for niece with no taxable income Rich Carreiro
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My wife and I have been living in our present location for
several years and have been running two small businesses; a =
Limited Partnership and a C Corporation. We need a change,
and would like to try living in a variety of different places
for a few months at a time. The easiest way to do this would
probably be to work as Temps, or possibly short-term employees =
of various businesses, however, we would like to do it through =
our own business in some form. Our first thought was to use =
our C Corporation for this purpose, in order to retain its =
benefits package. But after surveying the set up fees for
foreign corporations, in various locals, and considering the
fact that we might stay in a given state for less than a year, =
using a corporation seems less desirable. Therefore, we are =
considering the use of a Sole Proprietorship, which may be =
more practical in these circumstances. My questions have to =
do with using a Sole Proprietorship as our own "Temp/staffing
agency".
=
I would act as a Sole Proprietor and hire my wife as an em-
ployee (yes, she would be a legitimate employee) and obtain a =
tax ID# for the business. The business would be run out of a =
home office. I would attempt to sell our individual services =
at a better rate than another Temp agency would get for us. =
=
Questions:
=
1. I know that I can supply medical insurance to an employee
and that it is fully deductible to me, as the owner, and not =
counted as wages to the employee. Is there any difference in =
the tax treatment of medical insurance if the employee is my =
wife? Can the insurance that I provide to my employee/wife =
include coverage for me, as her family member, and still be =
fully deductible and not counted as income to me? Can I give =
my employee a dental plan, a vision plan and/or a medical re-
imbursement plan, as well as medical insurance, and have it =
be fully deductible to me, as the owner, and not counted as =
wages to the employee? Can these additional benefits that I =
provide to my employee/wife include coverage for me, as her =
family member, and still be fully deductible to me, as the =
owner, and not counted as income to me? =
=
If this arrangement will work for my wife, but not for me, can =
my wife start her own Sole Proprietorship and hire me as an =
employee? =
=
Are there any special tax rules that cover an employee that
is your spouse?
=
2. Some businesses that use Temp/staffing agencies, want to
see that all the people that they hire from the agency are
current on FICA and other withholding. Can a Sole Proprietor
pay himself a salary, rather than taking a draw, if it serves
a particular business purpose such as this?
=
3. If my business is based in a home office, and we start =
the day by working in our home office, can we both deduct the =
mileage that we drive to the businesses that hire our Temp/
staffing agency? I believe that businesses operating out of a
home office do NOT have to count any commuting miles? =
=
4. When you set up a business in one location, you get a Tax
ID# that's based on your location. When you move your business =
to a new location, do you have to get a new Tax ID#, or can =
you continue to use the old one?
=
- -
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