If one were to incorporate a company and thus a corporation is made. Is it possible for one or many employees to live via the corporation and take no income. To elaborate, the employee or employees don't get any income and for the sustainment of the corporation, the corporation itself sustains the employees. If so, then what does the tax situation look like? I assume that just like every other corporation taxes are paid on profits, but would this negate personal income tax for employees?
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If you're asking what i think you're asking (and I can't tell, because your sentences don't make a lot of sense), then no, you can't negate personal income tax by providing life essentials to employees as a fringe. Because fringe benefits are taxable, including things like housing and food provided at no cost (some exceptions if provided for the sole benefit of the employer at a detriment to the employee, but it's a narrow, narrow exception).
I cant cite specific IRS publications because I am too lazy to look (And so are you apparently) but I am fairly certain the IRS requires that corporations pay employees a reasonable salary to prevent such tax-exemptions. I am not sure how the IRS determines a reasonable salary, or perhaps its on a per-case basis if you get audited.
Do employees on assignment pay for corporate housing? I dont think so. Start a multistate company that requires its employees (yourself, your family and friends) to work "on assignment" in various locations (ie where they want to live anyway) and pay their rent and company car and give them per diem
I do apologize for being unclear in my op. As for the fringe benefits, aren't those only things that one sacrifices a salary for. The corporation I am talking about, there really would be no salary or wages. All Employees would work for no Salary/wages, though everything they could ever need would be at the company. Essentially they would live at and be the company. The corporation would pay taxes on profits, but the employees wouldn't need to pay income taxes as they have no income.
SUCKISSTAPLES said:Do employees on assignment pay for corporate housing? I dont think so. Start a multistate company that requires its employees (yourself, your family and friends) to work "on assignment" in various locations (ie where they want to live anyway) and pay their rent and company car and give them per diemI did some research on this a while ago. The company provided travel/housing is only tax free to the employee for short term contracts. Once it is clear that the assignment in the state will last 6 months or more for that employee, it becomes taxable compensation. There are a lot of other restrictions.
First, the individuals "working" for the company and not taking wages/salaries are not employees. An employee is an individual that is paid for work performed and taxes are withheld. So, these individuals are working for free? Or are these individuals working in exchange for living expenses (meals, clothing, housing)? The corporation can deduct those expenses ONLY if the workers are "on assignment". Otherwise, you will have to issue them a 1099 at the end of the year for all that the company paid for their expenses and they will have to file tax returns. It appears as if you are trying avoid reporting their income so they don't file tax returns. Do they not have valid SS#'s or TIN's if they are foreign nationals?
Pay them like any other outside sales position - minimum wage + commission (which will be 0 since they wont be doing much work to earn a comission)
Limit them to 6 month contracts. Hire the other relatives at the location when the firsts contract runs out. Surely enterprising FW businessowners can meet all the requirements.
Anyone have a list of all the requirements so we can devise ways to be in compliance?
Well it seems to me at least from what I have read, that a corporation has great control over how much they pay in taxes. The more they spend in expenses, the less they have in profits and this the less they pay in taxes. Due to this control, I am looking for a way to have employees pay as little tax as possible and let the corporation take the brunt of the tax(which it can limit, minimize and control).
Employees will be US citizens with SSN, but with no income or income incredibly low, filing would be optional.
how about owning the real estate and paying employee just enough salary for them to pay rent that just covers your expenses like property tax, insurance, utilities (include utilities in rent)..etc . they would still have to file, but they would be "poor".
Something like the corporation buys a house for 150K, the mortgage is 1100, insurance is 1500, property tax is 4000, water is 800, utilities is 3600 (unit would include electric and gas) and even cable at 1200. So the corp's annual expense is approximately 11K a year (not including 1100 for mortagage because it really should be the interest paid, not the monthly payment).
The numbers are not percise, its about the concept....so the corporation makes little money, but makes money to show its a business and the employee makes enough money to make the poverty line.
Don't forget we can include items like free medical, dental and car....just adjust the numbers accordingly.
In theory a corporation pays taxes at equal or higher tax rate than an individual. Retained profits can also be taxed if the government considers it excessive. If a salary is too high the IRS will complain so that it can taxes twice. That is the profits are taxed as a dividend (corporate profit) and your income (federal income tax).
Unless you are going to cheat on taxes, the mostly the corporation has a higher tax burden compared with an LLC.
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