Home: Message List - Beginning pay for a single employee "C" corp

Re: Beginning pay for a single employee "C" corp

Bridge — Wed, 04 Jun 2008 19:51:04 GMT

If you are a single owner/employee company you would probably be better off to change to an "S" corp or LLC (with an S election). This would typically have th best tax benefits for you - muchmore than a C corp. Check with your CPA.

If ou have not started business yet or the company name is not too important, shut down the C corp and start a new S corp.

Re: Beginning pay for a single employee "C" corp

Lighthouse24 — Wed, 12 Mar 2008 17:16:51 GMT

In general, it's to your advantage to take out whatever corporate profit you want for yourself as a regular salary the company pays to you, rather than taking it out as a profit distribution. The reason is because your salary is tax deductible for the corporation, and a distribution would effectively be double-taxed.

The Department of Labor defines a salary as any pre-determined amount of compensation that an employee regularly receives for each pay period. So technically, paying yourself varying amounts at irregular intervals would not qualify as a salary. Even so, if the total amount you claimed as salary for the year was reasonable, you'd probably not have any trouble.

Your salary must be deemed reasonable by the IRS, or they may claim you are merely "disguising" your distributions as a salary to avoid taxes.

Yes, your credit score will be a limitation for traditional lenders -- and yes, be wary of the offers you receive from offshore institutions. So your best start-up options may be to work regular jobs and save all you can to launch the business -- or find a partner.

Hope this helps. Best wishes.

Re: Beginning pay for a single employee "C" corp

Matthew — Wed, 12 Mar 2008 12:55:05 GMT

Thanks for the tip luckiest

Re: Beginning pay for a single employee "C" corp

LUCKIEST — Wed, 12 Mar 2008 11:18:36 GMT

Matthew, In business you have to spend money to make money.
Every business person should have an Accountant, A Lawyer and Maybe an Insurance Agent.
Talk to your accountant about your specific payroll question or ask SCORE.
LUCKIEST

Beginning pay for a single employee "C" corp

Matthew — Wed, 12 Mar 2008 05:04:53 GMT

Something I have not tackled yet it what are my boundaries when it comes to paying myself. When income is going to be choppy and uneven the first say 6-12 months do most just pay themselves with a company check when they can? Say for example there is no income the first two months, and then the third month a deal brings in 10,000 thousand. Can one just write themselves a check for a few grand for that month without crossing any corporate legal lines?

I know this isnt a legal forum and all responses will be based soley on opinion. With that in mind...share what you have found useful for you! Oh, and luckiest I have contacted score lol. I am moving from Colorado to Kansas on April 7th and will meet with my Kansas City Score advisor then. UNTIL that date im trying to gather in as much as I can for now. I am looking forward to a workshop next month too!

I think im going to open a business checking account with Bank of America. I only need 10K now to start up, and have a vehicle I could put up for collateral at around 6K. Nice car just old....Anyway, I understand they will want to go off personal credit and my score is under 600 and above 570. Will that eliminate any chances from what you all have experienced? I have had a few emails from here regarding some saying they can finance me, but they are institutions outside of the United States, and I dont feel comfortable with someone so eager to loan out money from another country.

I do not plan on using the 10K for salary either. Salary paid will be soley from cash flow off sales.

Thanks in advance
Matt