S-Corporation Compensation

S-Corporations can be a great way to structure your business. One great advantage can be the way owners of the S can structure compensation. The entity has similar organization of a C-corporation, but income is passed through to its owner as would a sole proprietor or partnership.

As with any business, making sure you are in compliance with the laws and code is key. Too many times owners of S-Corps take very low wages, allowing lower taxed profits to pass through to them. Recently the IRS has been taking a much closer look at these businesses and how owners are paying themselves. The AICPA’s article on what can happen in situations like this illustrates the need to make sure owners of S-corps are in compliance with compensation structure.

Another Lesson on Unreasonably Low Compensation