If you own an S corporation, taking no salary whatsoever can be a smart move or the cause of BIG problems with the IRS.
As is so often the case with the IRS, “it all depends.”
Do you want to learn the ins and outs of paying zero salary to an S corporation owner? Want to find out what you can do to legally avoid payroll taxes? Don’t miss my new article titled Tax Tips: S Corporation Pays Zero Salary to Owner.
Three ways our fact-filled article can help you:
- We’ll tell you why the S corporation zero-salary strategy can be a winning one. S corporations can serve as a great payroll tax–saving device because employee salary is subject to payroll taxes. But you’ve got to be careful. We’ll explain why when you read the full article.
- We’ll warn you about huge penalties you may have to pay. If the IRS decides that an S corporation owner tried to evade payroll taxes by disguising employee salary as corporate distributions, big trouble can follow. I’m talking about payroll tax penalties of up to 100% plus negligence penalties. You’ll learn how to play it safe when you read the full article.
- We’ll tell you what gets the IRS really angry. The IRS won’t object if an S corporation makes no payments to its owner-employee because the business is earning little or no income. But when the S corporation starts making money, it must first pay its owner-employee reasonable compensation. Then, if there’s any money left over, it can distribute the excess payroll-tax–free. You’ll get the facts when you read the full article.