Sole Shareholder – So, you formed a corporation from your current business, or you started off as a corporation, and now you need to draw a paycheck for yourself. If you were previously a sole proprietor or a partnership, you are used to taking an ‘Owners Draw’ from your business that was not payroll. But now that your business is a corporation, you can no longer take an ‘Owner’s Draw’, but instead need to be on the payroll and receive a paycheck.
You now will have payroll taxes deducted from your pay check, but if you are a sole shareholder of a corporation or you and your spouse are the only shareholders, then you may exclude yourself (and spouse) from State Disability insurance (S.D.I.).
This can save you up to $1,378.48 per shareholder ($2,756.96 total for you and your spouse) per year.
State Disability Insurance for 2023 is 0.9% of taxable wages paid up to $153,164 limit per year. By electing to exclude yourself and your spouse, you can eliminate this 0.9% from your personal corporate wages. Here is the math:
$153,164 Taxable Wage x 0.9% = $1,378.48 per
shareholder, times two shareholders = $2,756.96
To make this election, complete for DE 459 Sole Shareholder/Corporate Officer Exclusion Statement and submit it to the EDD. Here is a link to the form http://www.edd.ca.gov/pdf_pub_ctr/de459.pdf and the mailing address and contact numbers are:
EMPLOYMENT DEVELOPMENT DEPARTMENT
TAXPAYER ASSISTANCE CENTER, ATTN: SPECIALIZED COVERAGE DESK
P.O. Box 2068
Rancho Cordova, CA 95741-2068
Phone: (916) 654-6288
Fax: (916) 319-1179
Disability Insurance (DI) Statewide Toll-Free Number
The exclusion becomes effective in the current calendar quarter and remains in effect for not less than two calendar years.
The sole shareholder wages must be reported on a separate Quarterly Wage and Withholding
Report (DE 9). Write “Sole Shareholder” across the top of the DE 9.
Question: ‘Without SDI, what options do I have for disability coverage or Family Medical Leave Act?’
Answer: Aflac, MetLife and Mutual of Omaha are good alternatives, and they have coverage for areas that aren’t covered by SDI. Do some research and find out what is best for your situation.
have any questions about form DE 459 Sole
Shareholder/Corporate Officer Exclusion Statement, or State
Disability Insurance (S.D.I.) you can contact us
7231 Boulder Ave. #526
Highland, CA 92346