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Re: Question About Officer Compensation.
OutOfMyBox Dec 9, 2009 4:49 PM (in response to atoninfo)I would be tempted not to pay her through the company as you will be burdened with the additional Soc Sec taxes et al. Since you are an S Corp, the taxation treatment is passed straight through to you from the profits of the business. So unless you need to do this for sanity reasons, I would not do it, as you are burdening yourself with tax you do not need to bear as a couple.-
Re: Question About Officer Compensation.
atoninfo Dec 9, 2009 5:21 PM (in response to OutOfMyBox)I agree with you. But doesn't IRS require that all corporation Officer must be paid a "fair componsation".-
Re: Question About Officer Compensation.
OutOfMyBox Dec 9, 2009 6:58 PM (in response to atoninfo)Absolutely correct - but fair compensation should also take into account work expended and committed to the company rather than just a title. If the spouse is on the books as an employee only for items such as signatory support / banking et al, then a minimal amount may suffice. I would not get drawn in there unless the spouse was full time billing in the consulting also.
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I registered my S-Corp in Jan 2009 in the state of CA. I've been billing my clients thru my corp and I am drawing a salary for my services from the company. I am the only employee in my corp. My wife is an officer and holds CFO title for my company. I have not paid any compensation to her yet. I am also listed as an officer of the corp and I am holding other titles (CEO, President, etc). My company is using an accountant for all my accounting needs.
1. How do I pay a fair compensation to my wife at the end of the year? Do I need to pay any employer taxes for her compensation?
2. What would be a fair compensation for her? Please note that all daily accounting tasks are done by an accountant.
3. Do I need to report her as an employee of the corp to EDD?
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I registered my S-Corp in Jan 2009 in the state of CA. I've been billing my clients thru my corp and I am drawing a salary for my services from the company. I am the only employee in my corp. My wife is an officer and holds CFO title for my company. I have not paid any compensation to her yet. I am also listed as an officer of the corp and I am holding other titles (CEO, President, etc). My company is using an accountant for all my accounting needs.
My questions are:
1. How do I pay a fair compensation to my wife at the end of the year? Do I need to pay any employer taxes for her compensation?
2. What would be a fair compensation for her? Please note that all daily accounting tasks are done by an accountant.
3. Do I need to report her as an employee of the corp to EDD?