One Time Payroll due to Tax Status Conversion
BobbyDigital
Member Posts: 1
I just did a late s-corp election ( USA ) and I need to run payroll for the 1st time for the total amount of the 1 employee's salary but not pay the employee because they have already been paid for all wages in 2020. I do need to have Wave calculate and distribute the payroll taxes and unemployment tax to the IRS and State. Is this even possible?
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@BobbyDigital,
It is. You would be required to have the following:
EFTPS set up with the IRS, a state withholding account (unless n/a), state unemployment account. Once you compute payroll, you would need to file all the appropriate forms. They would include for Federal 941, 940, W-3 and W-2, applicable state withholding forms, and state unemployment report. My guess would be the federal tax payment would be due 1/15/21 along with the state. The 940, W-2, W-3 and unemployment are due 1/31/21. Your state may also have a reconciliation of withholding form that would be due as well.
Not that it is recommended, but I have seen where an S-Corp will pay a commission to the officer who then picks up that amount on Schedule C with no expenses. There is risk there with the IRS by not following the payroll regulations. In addition, the IRS can always argue that all the distributions to the owner were compensation. Best of luck!