View Full Version : Taxes between employee and employer

04-23-2014, 02:03 PM
I am a recent college graduate, and I work from home in my mother's business. It is a relatively small affair; but we have several components that make up the day-to-day running of the business, which I handle. I manage our website, our sales, and a lot of our advertizing and promotion.

Here is my question: Is this the most tax efficient way to do this. I live in the USA, and I am wondering if it would be worth while to start my own business as a "business manager" or some such. Then my mother could employ my company as a contractor, and neither of us would have to pay employment taxes.

Is this a worthwhile thing to pursue, or am I going to end up paying a similar amount no matter what?

08-05-2014, 05:42 PM
If you work for her as a contractor rather than as an employee you will still have to pay employment taxes. It is called "self-employment tax." Also, there are lots of rules (see the IRS website) that must be consider when you classify someone as an employee or a contractor. If you don't follow them, the IRS can impose penalties.

09-24-2014, 02:28 PM
If your mother is not pay self employment taxes then she is most likely taking some unnecessary risks from IRS stand point. If your mother's entity is taxed as an S Corp then the IRS still wants that owner to take some sort of wage. The IRS refers to it as "reasonable compensation".

Allan Madan
02-27-2015, 12:09 PM
Employers are required to deduct CPP, EI and taxes from employee payrolls.
Employers are required to issue a T4 slip for salaries paid during the year by Feb 28.

Madan Chartered Accountant

10-06-2015, 05:38 AM

Don't forget the 1099 and w2s that you would have to duly fill and file with the IRS in case you show yourself as an independent contractor.

10-28-2015, 05:02 AM
DIfferent states have different rules so, your mother need to pay tax in case if you are a contractor. It is wise to get advice on this topic from a tax specialist....

Ryan Reynold
01-01-2019, 01:05 AM
Here's a breakdown of the implicit costs considered by few but the boss. Let's assume a base annual salary of $70,000. This is the largest portion of the payroll tax paid by employers. Business owners must pay the federal government 6.2% of every dollar their worker makes until that annual salary reaches

01-02-2019, 11:10 PM
taxes in any case need to pay