combining wages

[oceanlovin'ea]

I remember hearing at a seminar this year (but I can't remember where and can't find my notes on it) that if you have 2 businesses during a year you can put all the wages on 1 W-2.
For example, I had a sole proprietorship for 5 months of the year and had an employee. Then in May, I formed an S corporation and still had the same employee.
There was a way to just include all the wages on one W-2.

Does this ring a bell with anyone else? I sure hope so. It is too early in the season to be losing touch with reality.

Thanks. Linda F

[outwest]

Yes you can but..

but after a huge mess reconciling this over 3 years and a taxpayer advocate referral, I don't recommend it any more. Just do the two forms, reconcile to the respective 941s, 940s, etc and go on.

[ChEAr$]

No way to do this

I remember hearing at a seminar this year (but I can't remember where and can't find my notes on it) that if you have 2 businesses during a year you can put all the wages on 1 W-2.
For example, I had a sole proprietorship for 5 months of the year and had an employee. Then in May, I formed an S corporation and still had the same employee.
There was a way to just include all the wages on one W-2.

Does this ring a bell with anyone else? I sure hope so. It is too early in the season to be losing touch with reality.

Thanks. Linda F

Remember that with your schedule c business you had an FEI#, but with the
S corporation you have yet another number, so wages must be property reported
under each number.

[oceanlovin'ea]

More trouble than it is worth

Whereever I heard this, they told how to move the returns from the first business to the second. But that was my concern that there would be confusion and it doesn't instill confidence in your clients if you make a royal mess of their businesses.

The one advantage I can see is that you would only have 1 $7000 limit for state unemployment and federal unemployment. With 2 businesses, you will end up paying on $14,000 of wages. That is not fair.

But I think I will do each business separately. Maybe I'll call the state or IRS tomorrow and see what kind of answers I get from them.That should prove interesting.

Linda F

[S T]

I had one of these

Linda,

No matter which way you choose to report, you will still have a mess that you will have to explain in about 1.5 years.

California kept the same EIN#, so SUI was not duplicated. So we only paid on the first $7,000 of wages. That was good.

When I called IRS, they said to file the appropriate 941 forms under the old number and then new 941's under the new number. Then attach another form (I don't remember the form #) giving the breakdown so we didn't not pay more FUTA than on the first $7,000. Then I was to issue one W-2 form under the then current S Corp.

Well guess what, IRS on 941 forms couldn't not match, SSA could not match, and I had notices from everywhere, except State of Calif. Finally was able to resolve the issue. So all was good, but it was a "sea of paperwork".

Sandy

[Absolut]

Combining W-2's

#1. Sole Proprietor it one business and payroll taxes were reported under that company with that EIN# (Employer Identification Number).
So a W-2 should be reported for the wages under the "Sole Proprietor".

#2. S-Corp that was formed, is considered another business because it should have a new EIN#, and wages are (should be) reported under the new number. So a W-2 should be reported on the wages given to the employee whil he/she worked for the corporation.

If you find that I'm wrong please let me know, but this is the way I've always done it, and when I talked to the state about the same situation I had with a client this year, this is how they told me to do it.

[ChEAr$]

Also

there is the matter of state unemployment taxes.

The rule around these parts is that a successor business (corporation after proprietorship
in the OP's case) can get credit for those first wages paid, thus maximum on any employee's pay will be THE state max wages.

But I'm not sure about FUTA, whether this principle carries over or not. Haven't had it
come up in years now.

[JohnH]

Relevance

With one employee, aren't we talking about $56 in FUTA? Seems like your time to do all the math and reply to all the notices is worth more than that. I'd do separate sets of payroll reports for the sole prop and corp, and forget about it. That approach will be much easier to explain if any sort of question ever arose.