Do You Pay You?

On February 17th, 2011, posted in: Uncategorized by 0 Comment

Don’t let payroll is be a stumbling block for you! The IRS is very serious about it!! Paying themselves is one area that many S Corp owners aren’t aware that they are required to do. They think they can just take money out of their business as a draw like a sole-proprietor. Not so! Even solo-preneurs, S Corp owners with no employees, must take a pay check.

Here are some guidelines:

  • The business must compensate you for your efforts in an equal way that you would pay someone else to do your job. Check with your CPA to be sure that you are taking enough as salary.
  • Keep abreast of how tax laws that affect your business are changing. Payroll taxes are subject to change. Usually annually, but sometimes mid-year, too. Payroll rates changed on 01.01.11.
  • You are entitled to take dividend distributions as well as payroll. As an investor in your business, you are entitled to take distributions as a return on that investment. It is treated different for payroll for tax purposes.

For information on affordable payroll options: Carolyn@TheAccountantsOffice.biz.

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