Accounting advice needed; How do I go about paying myself?

[benburch]

Hey, guys...

White Rose was incorporated as an S-corp in January, and it is finally time to pay myself something from the proceeds.

How do I go about doing it?

I'm too poor yet to afford a real accountant.

Is there some step-by-step guide somewhere I could read? I very much want to keep this all totally legal and tax-safe.

Thanks!!!

[madrchsod]

1. you are really going to

need an accountant or a lawyer.trust me i know-took a couple of years to pay back the irs on the money my wife and i "made" when we had a business. you know anyone majoring in accounting or law?

[benburch]

2. Not a soul. nt

[daisygirl]

3. I'm not a tax expert but

the way I understand it, an S-corp is a pass-through entity, meaning any money the corporation makes is considered to be your personal income, accounted for on your personal income tax return. The corporation itself doesn't pay any income tax as any income is considered to be your income. I believe you file a form 1120-S annually on behalf of the corporation, and the corporation should issue you a form K-1 (Shareholder's Share of Income, Credits, Deductions, etc.) to report the income to you. (The 1120S will calculate how much is reported on form K1.)

(edited to clarify how I think you're supposed to go about paying yourself:)
I'm not 100% sure about this, so definitely research it more and maybe pay for a consultation with an accountant, but I think you just take a draw when you need to (as with a sole proprietorship) and then pay quarterly estimated taxes and pay the self-employment tax on your annual tax return. You can also pay yourself dividends in addition to salary if you're doing well, but if your salary is low and you're paying yourself dividends, that's asking for an audit because the IRS tends to consider that as evasion of self-employment tax.

Oh, hey, look, I found a chart of what you're supposed to do:
http://www.irs.gov/businesses/small/article/0,,id%3D98263,00.html

Also--S Corp frequently asked questions: http://www.irs.gov/faqs/faq-kw157.html

Searching at the IRS web site is nearly pointless. A good trick is to go to google, type site:irs.gov and then your keywords in the search box. Google seems to do a much better job of indexing the IRS site than the IRS itself does.

The book "Tax Savvy for Small Business" by Frederick W. Daily (put out by Nolo Press) is a good one.

Hope that helps!

[mongo]

4. That's my Daisy

So my advice would be to marry a geek that can ferret through gov't publications like a terrier on steriods.....

Oh, and I belive that since you're an s-corp you may have to file quarterly tax returns....

We started as a c-corp because we thought we would be making money (silly us) and could afford health care for our employees, etc.

[benburch]

5. Good pointer.

I ordered the book.

[daisygirl]

6. Also, just added

some more info to my post above that I came up with after I first posted it, some links to IRS pages that actually turn out to be helpful.

[Name removed]

7. Deleted message

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[lasttrip]

8. no se tax for s corp

wage should be "fair", cant only take dividends if profitable, also feds and most states looking for unemployment taxes.

s corps were set up for wages and return on investment.

work with over 200. many "grey areas". :)

ben, PM me and i can help you out with taxes and tax planning.

planning is the key.

LT