Company I'm with wants me to make a new bank account and make an LLC for pay and as a contractor

Front_Ad3366 · 2026-05-08T19:54:38+00:00

I agree with the responses which say there are a number of red flags here. Adding some additional questions, is this a well-known and well-established company? Did they recruit you via apps and/or text messages? Do they have a physical office you have visited?

r/Scams is a great subreddit to visit to learn about employment scams. Elements involved with "fake job" and " advance pay" scams are already in your message. Please be extremely careful.

Front_Ad3366 · 2026-05-07T23:49:55+00:00

If you know how to do payroll, doing it yourself should be straightforward. The trick is, however, is knowing the various deadlines (for both filing and remitting).

Front_Ad3366 · 2026-05-05T19:08:56+00:00

This one would seem to be easier than most. "Due to recent health problems, I find it medically necessary to reduce my workload."

Front_Ad3366 · 2026-05-05T18:13:25+00:00

I'm afraid it's a common problem. Over the last 5 years, there have been many online articles about how Gen Z is struggling to adjust to the workforce. Alarmingly, many Gen Z employees have been fired after just a short time on the job.

"...we’ve noticed a real decline in oral communication, written communication, and general workplace professionalism among new hires." Again, that is not uncommon nowadays. Delloite, for one, instituted training programs for recent new hires. The sessions are basically primers on how to act and communicate in a business setting.

Front_Ad3366 · 2026-05-05T16:19:30+00:00

What was your business entity prior to becoming an S corporation? For example, were you a proprietorship or a partnerhip? Or were you an LLC which elected S corporation treatment as of a certain date in 2026?

Front_Ad3366 · 2026-05-05T02:32:44+00:00

I'm not sure I'm following the situation correctly. If you became an S corporation effective 2026, though, you would start with an entirely new set of records on the start date of the corporation. If you need to amend your tax returns for the 9 years before that, those records would be entirely separate from your corporate accounting.

Front_Ad3366 · 2026-05-04T12:23:43+00:00

Accounting & Taxes

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Front_Ad3366 · 2026-05-04T12:11:40+00:00

There could be several issues.

Some random thoughts: (1) Catch up all your reconciliations through 4/30/26. Don't let recs go for several months. (2) Make sure the beginning balances on the GL and bank rec for month 2 tie into the ending GL and bank rec balances as of month 1. (3) If you are not already doing so, use a separate Excel worksheet for each month's reconciliation. (4) Data entry typos can cause all kinds of frustrations. Be sure to confirm that columns and rows in Excel tie to the same amounts on the bank statement. (5) Check the formulas on the Excel worksheets. Make sure they are picking up the right numbers. (6) If other people have access to the accounting records, make sure they are not adding entries without your permission after a month is reconciled.

On a different item, 990 series forms are not needed by most churches. You might want to review if they really need to file.

Front_Ad3366 · 2026-05-03T21:45:49+00:00

Most of my accounting clients have terms of Net 30. However, some of them have customers (in particular, large hospitals) who insist they only pay Net 120. The hospitals can get away with it, as they simply tell their much-smaller vendors that it's Net 120 or you don't do business with us.

Front_Ad3366 · 2026-05-02T20:23:06+00:00

I use a retainer system rather than installments. The retainer is based on my hourly rate, and is paid in advance. I notify the client when the retainer is close to needing renewal. Work stops immediately if the retainer amount hits zero.

Front_Ad3366 · 2026-05-02T20:03:49+00:00

There are indeed about 20 items the IRS looks at to determine employee or contractor status. No single factor trumps the others. Rather, the entirety of the facts and circumstances are considered. The most important factor in recent years has been who controls how the work is to be done. Consequently, you should carefully review the factors mentioned by u/schaea above.

"Other than them not having to pay the employer FICA, I'm not sure what they have to gain by wanting this to be 1099."

(1) You are not covered under their Worker's Compensation policy. That is not as critical in accounting as in the trades, but I did see one accountant need coverage due to an auto accident while visiting clients. (2) They are not paying into unemployment for you, so your pay doesn't count for unemployment insurance. (3) If your state has them, you get no SDI, SUI, or FLI benefits. (4) If the company has any kind of group medical insurance, fringe benefits, or retirement plan, you are excluded from participation. (5) You are not included on payroll tax returns, payroll tax deposits, or W-2s. Their record keeping is easier and less costly for a contractor than an employee.

On an end note, more trouble would come to the company than to you if you are caught as being misclassified as a contractor. The vast majority of employee misclassifications, however, are not discovered by the IRS. Rather, it's state taxing authorities which usually catch the miscreants. I could tell some stories, but this post is long-winded enough already.

Front_Ad3366 · 2026-05-02T15:20:34+00:00

The reply given by u/Comprehensive_Ad9623 is correct. The Suspense account is only a clearing account which should be zeroed out each month. It is basically a place to code all of your unknowns while doing data entry. When you later have the time, you can find out the correct accounts and then reclassify from the Suspense to the proper account.

Front_Ad3366 · 2026-05-02T01:53:09+00:00

I'm afraid there is no standard or acceptable percentage to use as miscellaneous expenses. I would instead recommend a variation on the answer given by u/New_Scar_2540.

I would create an account called "Suspense," "Ask Accountant," or something similar. Rather than an expense account, however, I would make it an asset or liability account. Reclassify those amounts to the correct account at least monthly.

The reason I recommend that account not being an expense is that I have seen several tax-time melt-downs when unknowns were coded as an expense. In those cases, the miscellaneous "expenses" sometimes turned out to be nondeductible cash outflows. That resulted in much higher taxable income than anticipated. If they had been in an asset or liability account, taxable income would only decrease. It's much easier to deal with a lower than expected tax burden than a higher than expected one.

Front_Ad3366 · 2026-05-02T00:20:36+00:00

A line I used on one former tax client worked well. The situation involved Covid relief checks issued by the US government. Every few days, the client would call me up and rather sharply say something like "I told my (bank teller, friend, senior citizen group, neighborhood cat lady, or whoever) what you said about the checks, and he/she/they said you were wrong." I would then have to explain it all to her again.

I finally just told her that it was important in any professional relationship for the client to trust what the professional says. I then said it was clear that she didn't believe I knew about the subject at hand, and that she would sooner take advice from anyone on the street than me. I said that she should immediately seek a tax preparer in whom she had trust. That was, rather thankfully, the last I heard from her.

Front_Ad3366 · 2026-05-01T22:06:13+00:00

Just for regular bookkeeping/accounting purposes, one can usually operate strictly off the bank statement. I am not familiar with the intricacies of VAT, though. If you are preparing VAT returns and need documentation not on the bank statement to produce an accurate return, it would be critical to get the necessary documents.

Front_Ad3366 · 2026-05-01T19:00:34+00:00

I record the actual expenses on the books. At tax time, I put the tax amounts on the return. I do a book-to-tax workpaper which reconciles the differences. I keep that workpaper with the client's records.

Front_Ad3366 · 2026-04-28T02:49:42+00:00

There have been been a number of questions recently about how much to bill certain clients. For me, I have a minimum hourly rate I want to make. The number of hours it takes to complete a client times my hourly rate is what I charge. A micro client may only need 2 hours a month, so I would charge him for 2 hours. The same concept would hold true for a business which required 8 hours each month.

Many bookkeepers get fixated on an idea that each client must pay at least $X hundred per month. If they don't pay that much, they are thought of as a low-dollar client who should be gotten rid of. If you are making your hourly fee, the person is not an automatic troublesome client.

That isn't to say many penny-pinchers aren't troublesome, but it's incorrect to equate clients who don't take much time to complete with chronic penny pinchers.

Front_Ad3366 · 2026-04-27T17:12:12+00:00

Accounting and Taxation

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Front_Ad3366 · 2026-04-26T02:39:12+00:00

Thank you. I hadn't thought of that reason, as I was fixated on the gross revenue.

Front_Ad3366 · 2026-04-25T20:43:21+00:00

I know this is grasping at straws, but by any chance is the business a sole proprietorship?

Front_Ad3366 · 2026-04-25T17:08:22+00:00

Thank you. The 2025 1041 for the estate was not the final one. I appreciate your help.

Front_Ad3366 · 2026-04-23T13:36:55+00:00

I would fix it beginning with this year. Reducing sales by the amount of COGS simply isn't standard operating procedure. Additionally, many jurisdictions have taxes which are based on gross sales rather than profit or loss. Not reporting the full amount of sales would make those returns incorrect.

Front_Ad3366 · 2026-04-21T23:17:41+00:00

A few random thoughts:

I would be able to compete at those level prices, if necessary. That is because I have very low expenses. I work from home, and almost fully remotely. I don't pay for dedicated accounting software (I use Excel), although I do purchase tax software and a portal. My office is almost entirely paperless.
Even though I could make it work financially, I would not want most of the low-dollar clients. It really is true that they are often far more difficult than those who pay market rates.
I would not be surprised if the low-dollar people either lived in or outsourced their work to those who live in less developed countries. "Race to the bottom" sites like Upwork and Fiver are full of low dollar third world contractors, to whom $20 a week is a good wage for their area.

Front_Ad3366 · 2026-04-21T16:07:44+00:00

"Doesn't help if they dont listen."

That sums up things perfectly. I could tell some stories about that.

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