Expert: Ed McFarland - 8/21/2004

Question
Thank you for taking my question.
We have a small s-corporation, Three partners, and contractors(self employees working for us).We have to pay sociel security amd medicare match on our payroll..This is getting very expensive.There any way that we can pay at the end of the year ,even if we have to restructure our business..from oorporation to something else?

Answer
If the subcontractors are self employed , you shuld be paying them as 1099 employees. Which would make them responsible for their own medicare and social security taxes. But regular employees such as your 3 partners would have to go through a W2 and require you to pay the taxes.

One solution is for the partners to take less out through payroll and more out through dividends of the corporation.

Check out www.irs.gov for the rules, but somebody has to pay for your share of social security and medicare.

Good luck.