Is TaxBandits a good option for handling S-corp payroll and forms for a single owner business?

Thanks for the info! I'm in a similar situation. Do I need to run payroll every month, or can I just do it quarterly? And does TaxBandits handle the state unemployment and other state payroll taxes too, or just federal?

You can definitely run payroll quarterly instead of monthly if that works better for your cash flow - there's no requirement for how often you pay yourself as long as you take reasonable compensation for the year. Just be consistent with whatever schedule you choose. TaxBandits does handle state unemployment and payroll tax filings for most states, but the coverage varies by state. I recommend checking their website for your specific state's forms or contacting their support team directly to confirm which state forms they support in your location.

That sounds interesting. Does taxr.ai actually process and submit the forms for you like TaxBandits, or is it more of an advisory tool that just tells you what to do?

I'm skeptical - how exactly does it determine "reasonable compensation"? That seems like it would depend on a lot of factors specific to your business. Does it actually take all that into account or just give some generic percentage based on industry?

It doesn't actually submit the forms for you - it's more of an advisory and planning tool that helps you understand exactly what you need to do. It analyzes your documents and creates a customized plan, but you'd still need something like TaxBandits to actually file the forms. The reasonable compensation analysis is actually pretty sophisticated. It asks for your industry, location, business revenue, your role and responsibilities, hours worked, and then compares that to market salary data for similar positions. It's not just a generic percentage - it builds an actual defensible compensation plan you could use if you were ever audited.

Wait, how does this work exactly? Do they have some special connection to the IRS or something? I've literally spent entire days on hold with the IRS and never got through.

This sounds fake. There's no way to "skip the line" with the IRS. Everyone has to wait on hold like the rest of us. And even if you do get through, most agents don't know the specifics about S-corp payroll requirements.

They don't have special connections to the IRS - they use a technology that navigates the IRS phone tree and waits on hold for you. When an agent finally picks up, you get a call back and are connected directly to the agent. It's basically like having someone else wait on hold instead of you. The key is that they know which specific IRS department handles S-corp issues and exactly how to navigate to that department. When I called on my own, I kept getting transferred around. And you're right that not all IRS agents know S-corp rules, but by getting to the right department, I was connected with someone who specifically handles business tax issues.

Do they offer direct deposit for the payroll? And how much do they charge for a single-person S-corp approximately?

They don't handle the actual payment processing like direct deposit - remember it's mostly a tax forms filing service, not a full payroll processor. You'd need to set up the payments yourself through your bank. Since I'm just paying myself, I just transfer money from my business account to my personal account on paydays. For a single-person S-corp, I pay around $150-180 per year total for all the quarterly and annual filings. It's way less than the $50+ per month that full-service providers were quoting me. They do have different pricing tiers depending on which specific forms you need, so your cost might vary slightly.

That's actually a really good point. Do you have any tips for finding a bookkeeper who specializes in S-corps? I've found that a lot of general bookkeepers don't really understand the specific requirements.

This is really helpful, thank you! The 40% rule for reasonable compensation is interesting - I've been struggling to figure out what's actually "reasonable" for my business. Did you document your research process for determining that percentage? I'm worried about being able to defend my compensation amount if I ever get audited. Also, great point about the workers' comp insurance. I hadn't even thought about that requirement. Do you know if that's something that varies by state, or is it pretty universal for S-corps?

Yes, I definitely documented my research process! I kept screenshots of salary data from sites like PayScale, Glassdoor, and Bureau of Labor Statistics for photographers in my metro area. I also saved job postings for similar roles and created a simple spreadsheet showing the range of salaries I found. My CPA said having that documentation would be crucial if the IRS ever questions the reasonableness. The 40% wasn't a hard rule - it just happened to fall within the reasonable range based on my research. Some years it might be 35%, other years 45%, depending on business performance and what the market data shows. For workers' comp, it definitely varies by state. Some states exempt single-member LLCs or require it only if you have employees. I'd recommend checking with your state's workers' compensation board or asking your business insurance agent. In my state (Oregon), I was required to get it even as a single-member S-corp, but the cost was pretty minimal - around $200/year for my photography business classification.

Yes, I definitely documented my research process! I saved screenshots of salary data from sites like PayScale, Glassdoor, and Bureau of Labor Statistics for photographers in my metro area. I also looked at what similar photography businesses were paying their employees based on job postings. I created a simple document showing the salary range ($35K-$55K in my area) and explained why I chose the middle of that range based on my experience level and business revenue. My CPA reviewed it and said it looked defensible. Workers' comp requirements vary significantly by state. Some states require it for all business owners regardless of structure, others exempt single-member LLCs but require it for S-corps, and some have revenue thresholds. I'd definitely check with your state's workers' comp agency or ask your CPA - the penalties for not having required coverage can be steep. In my state (Colorado), I had to get it even though I'm the only person in the business.

Yes, I definitely documented my research process! I created a folder with salary data from PayScale, Glassdoor, and BLS.gov for photographers in my metro area, plus I saved screenshots showing the methodology I used. My CPA advised keeping this documentation in case of an audit - you want to show you made a good faith effort to determine market rates. The 40% wasn't a hard rule - it just happened to align with what market research showed for someone with my experience level and role responsibilities. Some years it might be 35%, other years 45%, depending on how the business performs and what comparable salaries look like. Workers' comp requirements definitely vary by state. Some states exempt single-member LLCs or small S-corps, while others require coverage regardless. I'd recommend checking with your state's workers' comp agency or asking your business insurance agent. In my state (Oregon), I was required to get coverage even as a sole owner, but the premium was pretty minimal for a photography business since it's low-risk.

Yes, I definitely documented my compensation research! I created a simple file with screenshots of salary data from sites like PayScale, Glassdoor, and Bureau of Labor Statistics for photographers in my metro area. I also noted the hours I work (since I do this full-time) and my specific responsibilities as the business owner. My CPA said this kind of documentation is exactly what you want if the IRS ever questions your compensation. Workers' comp requirements definitely vary by state - some states exempt single-member LLCs or S-corps under certain revenue thresholds, while others require it regardless of size. I'd recommend checking with your state's workers' comp agency or asking your CPA. In my state (Colorado), I was able to get an exemption since I'm the only employee, but the rules are different everywhere. The key thing my accountant told me is that "reasonable compensation" should reflect what you'd pay someone else to do your job in your business. So if you're doing both the photography work AND running the business operations, that justifies a higher salary than just the photography piece alone.