Don't forget about the annual price increases!! I started with ProSeries 7 years ago and my cost has doubled since then. They get you with the low initial price but then jack it up every year knowing it's too much of a pain to switch.

For growing a practice with complex multi-state and partnership returns, I'd strongly recommend considering CCH Axcess Tax or Thomson Reuters UltraTax CS as your primary options. Both handle complex business structures exceptionally well and won't limit your growth potential. From my experience, Drake is great for straightforward returns but becomes cumbersome with multi-state allocations and complex K-1 flow-throughs. ProSeries falls into a similar category - fine for basic practice but you'll outgrow it quickly if you're targeting complex business clients. One thing to really consider is the total cost of ownership beyond just the software license. Factor in training time, support quality (as others mentioned), and the efficiency gains on complex returns. A more expensive platform that saves you 30 minutes per complex return will pay for itself quickly. Also, whatever you choose, negotiate a multi-year price lock if possible. The annual price increases can really add up over time, and having predictable costs helps with business planning. Some vendors are willing to work with you on this, especially if you're switching from a competitor.

As someone who's been through this exact confusion with my small construction business, I completely understand that "circular" feeling you're describing! I made the same mistake for two years before finally getting it straightened out. The key insight that helped me was realizing that you're not creating two deductions - you're properly allocating one expense between business and personal tax treatment. Your S-Corp spent real money on vehicle expenses, so it gets to deduct those actual expenditures. The personal use portion being added to your W-2 isn't a "wage expense" that gets deducted again - it's just ensuring you pay personal income tax on the benefit you received. Think of it this way: if your S-Corp spent $12,000 on vehicle expenses and 25% was personal use, the company deducts the full $12,000 as a legitimate business expense. You then pay personal income tax on $3,000 as a fringe benefit. The S-Corp doesn't get an additional $3,000 wage deduction because it already deducted the money when it was actually spent on the vehicle. I'd recommend keeping detailed mileage logs throughout the year to support your business vs. personal percentages. The IRS is pretty strict about contemporaneous records for vehicle deductions. Once you get the hang of this concept, it becomes much clearer - you're just making sure the tax treatment properly reflects the economic reality of how the vehicle was used. Good luck with your new accountant meeting! This is definitely one of those S-Corp issues worth getting clarity on early.

As a new S-Corp owner with a small accounting practice, I was struggling with this exact same issue! This thread has been incredibly helpful in clarifying the PUCC treatment. The breakthrough for me was understanding that there's no "double dipping" or circular accounting happening. My S-Corp legitimately spent money on vehicle expenses - gas, insurance, maintenance, etc. - and those are real business expenses that deserve the full deduction. The personal use portion being added to my W-2 isn't creating another business deduction; it's just ensuring I pay personal income tax on the benefit I received from the company's spending. I was making the same mistake as many others here - thinking that if the personal use goes on my W-2 as wages, then somehow the business should also deduct it as a wage expense. But now I see it's simply: the company deducts what it actually spent, and I separately report the taxable benefit I received. One thing I'm curious about - for those tracking mileage throughout the year, do you find it better to use actual expenses method for the business deduction and then use the standard mileage rate to value the personal use portion for the W-2? Or do you stick with the same method for both calculations? I want to make sure I'm being consistent but also optimizing the tax treatment properly. Thanks to everyone for sharing their experiences - this community is such a valuable resource for navigating these S-Corp complexities!

I'm just getting started with my small handmade jewelry business and this thread has been incredibly helpful! I was having the exact same worries about my EIN classification. When I applied a few weeks ago, I selected "retail sales" since I'm selling my pieces at local craft markets and through social media, but then I started second-guessing myself because I'm actually making everything from scratch - wire wrapping, beading, soldering simple connections. Reading through everyone's experiences here is such a huge relief! It's reassuring to know that so many other creators went through this same classification anxiety and that it doesn't actually impact what I can deduct. I've been carefully tracking all my material purchases - sterling silver wire, gemstone beads, findings, tools - but wasn't sure how to categorize them come tax time. Based on all the advice shared here, it sounds like my materials should go under Cost of Goods Sold since I'm transforming them into finished jewelry pieces for sale. The tips about keeping detailed records and tracking which materials go into each piece are really valuable too - I'm definitely going to be more systematic about documenting my material usage. Thanks to everyone who shared their real-world experiences! This kind of practical knowledge from actual small business owners is exactly what newcomers like me need to hear. Now I can focus on growing my business instead of worrying about whether I messed up some paperwork!

I'm so glad I found this thread! I just started my small custom sticker business and was having the exact same concerns about my EIN classification. When I applied last month, I went with "printing services" since I'm designing and printing custom stickers, but then I started wondering if I should have selected "retail sales" since I'm selling directly to customers online and at local events. This whole discussion has been incredibly reassuring! It's such a relief to hear from so many other small business owners who went through the same classification confusion and that it doesn't actually limit what I can deduct. I've been tracking all my material costs - vinyl sheets, transfer tape, printer ink, cutting blades - but wasn't sure how they'd be categorized for tax purposes. Based on everyone's advice here, it sounds like my materials should go under Cost of Goods Sold since I'm converting raw materials into finished stickers for sale. The emphasis on detailed record keeping is really helpful too - I'm going to start being more systematic about tracking which materials go into each order. Thanks to everyone who shared their experiences! This kind of real-world knowledge from actual business owners is exactly what newcomers need to hear. Now I can stop worrying about the paperwork and focus on growing my sticker business!

One thing nobody has mentioned yet - the self-employment tax might seem painful now, but remember half of it is deductible on your federal return. Also, paying self-employment tax means she's building Social Security credits for retirement. If she consistently avoids self-employment tax by using Schedule 1 incorrectly, she could find herself with reduced Social Security benefits in retirement. Plus, proper Schedule C filing allows her to deduct legitimate business expenses related to her athletic activities - equipment, travel to events, training costs, etc. This can often offset a significant portion of the self-employment tax burden.

Based on all the great advice here, it sounds like you definitely need to file your sister's 1099-NEC income on Schedule C with self-employment tax. I went through something similar with my freelance graphic design work - my accountant initially suggested Schedule 1 to "save money" but after doing more research, I realized that was completely wrong. The fact that your dad filed it incorrectly last year and didn't get caught doesn't mean it was right - as Miguel mentioned, the IRS often catches these things later with automated matching. Better to file correctly now than deal with penalties and back taxes later. One practical tip: make sure to track all her business expenses related to her athletic activities throughout the year - training equipment, travel to competitions, coaching fees, etc. These deductions on Schedule C can really help offset that self-employment tax burden. I wish I had started tracking my business expenses earlier!

Use TurboTax or FreeTaxUSA - they make it super easy to enter even tiny W-2s like this. Takes maybe 2 minutes and saves all the worry. I had a similar situation with a $45 W-2 last year and just entered it to avoid any headaches.

Just to add another perspective - I work in payroll and can confirm that employers are required to issue W-2s for any amount of wages paid, even if it's just $24.50. The lack of federal tax withholding is completely normal for such a small amount - the withholding tables are designed so that very low earnings don't trigger federal income tax withholding. However, as others have mentioned, you absolutely should report this income. The IRS receives copies of all W-2s electronically, and their automated matching system will flag your return if there's a discrepancy. Even though the actual tax impact might be zero (depending on your total income), omitting it could trigger correspondence that's way more hassle than just including it. Pro tip: If you're using tax software, it will automatically calculate whether this small amount actually affects your tax liability. In many cases, it won't change what you owe or your refund amount, but reporting it keeps you compliant and avoids potential issues down the road.