Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Business Owners: Review Your S-Corp Officer Compensation Before Year-End! #BusinessFinance

Name: Painting Business Owners: Review Your S-Corp Officer Compensation Before Year-End! #BusinessFinance
Uploaded: 2024-11-20T14:15:00+00:00
Duration: 51 s
Channel: Daniel Honan
Description: In this advisory segment, the speaker reminds S‑corp owners that they must pay themselves a W‑2 salary, which incurs roughly 15% payroll taxes on each…

20 Nov 2024 · 1 min

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In this advisory segment, the speaker reminds S‑corp owners that they must pay themselves a W‑2 salary, which incurs roughly 15% payroll taxes on each dollar. He emphasizes the importance of reviewing officer compensation before year‑end to ensure the salary remains reasonable, especially if the owner’s role has shifted from full‑time operational work to a part‑time CEO or investor position. The goal is to keep the salary as low as can be justified while complying with tax rules.

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if you have an S corp, then you are paying yourself a W-2 wage or salary. So this time of year is perfect for reviewing your officer compensation. We know that every dollar you pay yourself through payroll is going to be subject to about 15 cents of payroll tax. So we want to make sure that our reasonable compensation is reasonable and no more. We want to keep it as low as we can reasonably justify. The fall is a great time to look back and see, has my role changed in the company? Am I less active in the day-to-day operations? Have I shifted from being a full-time workaholic employee to maybe more of a part-time CEO investor role? If that's the case, is my compensation still reasonable for what I do?