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Article Date:
April 2011


Word Count:
935

 

 

How to Audit-Proof the Owner’s S Corporation Salary


Why would you pick the S corporation as a form of business entity?

 

Your likely answer: cut self-employment taxes.

 

How do you do that?

 

Pay a low salary and take the remaining profits as distributions that are not subject to the self-employment tax.

 

Problem

 

If the salary is too low, the IRS audit will cause you difficulty, payroll taxes, and those huge payroll tax penalties.

 

If the salary is too high, you cheat yourself from saving money on your self-employment taxes.

 

This article will help you establish a salary that’s not too low and not too high. Thus, if your ... Log in to view full article.

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