Paying myself in a S-Corp?

Discussion in 'Growing and Managing a Business' started by agalihax0, Jun 25, 2012.

  1. agalihax0

    agalihax0
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    I am new to the whole business owner situation, and I have a few questions about paying myself.

    I am the President/CEO of a S-Corp. There are no other officers/stockholders in this company, just me. Right now I pay myself just as any other employee. I only pay myself when I work, just like everyone else. However, being a construction based business, without contracts the hours get slow and I would like to know other ways to pay myself. The company is only a little over a year old, and I really don't want to start paying myself a salary.. as I don't know how much I should pay myself right now, I'm working more on getting the company built up. With personal obligations popping up, I was wondering if there's a way to say.. withdraw $5-10k from the business account and put in my personal account? Does that draw red flags for the IRS, or do I just let me accountant know what moneys I used to personally pay myself when she goes to do my taxes?

    I'm don't really understand the whole paying myself dividends/profits.. just not sure if it's possible to take some money out of the account without it sending red flags.. or just not something I'm allowed to do.

    Thank you :)
     
  2. sigma

    sigma
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    Well, if this is the case, you can considered to pay yourself in term of project base or something like consultant fee instead of salary. What you need to do is having a proper account record regarding this amount and youself gotta pay for the tax accordingly, then i can not see any problem
     
  3. Fergal

    Fergal
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    Welcome to Business Advice Forum agalihax0.

    Is the amount that you want to pay yourself less than the profit the business is making?
     
  4. Business Attorney

    Business Attorney
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    You should definitely talk to your accountant about what you are paying yourself. As you probably know, in the U.S. salary is not only subject to wage withholding but also to Social Security and Medicare taxes. If your business is not earning as much as you are drawing out, you may end up needlessly paying payroll taxes on what is essentially already your own money. Alternatives might be taking a loan from your company or paying a dividend of previously taxed income. Your accountant should be able to help figure out what works the best for you.
     
  5. Mark T

    Mark T
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    What I can definitely suggest you is what Business Attorney stated. You should talk to a CPA, or an accountant, or anyone whom you can ask for professional and legal advice about your company and how to manage well your financial assets and expenses. You cannot do it on your own, and sure you will need it for you to better plan your company's financial stability and success.


    Goodluck and Regards,
    Mark T
     

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