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S-Corp - Paying Myself A Salary (help needed)
Posted on 7/2/19 at 8:51 am
Posted on 7/2/19 at 8:51 am
Any business owners with an S-corp willing to give advice on how to pay myself a "reasonable salary". I'm not too concerned with the amount but more so of how to go about paying the salary. Do you utilize a certain software to do so? Can I just transfer the funds to my personal account or is there a certain way I absolutely have to go about it? Thanks in advance.
17
Posted on 7/2/19 at 9:08 am to Cousin
My CPA can't even answer this question... 
I'd go with, google search your industry, position, and experience for salary... Pick the low end of the range, and POW! "Reasonable Salary". You can be the crappiest paid, but you shouldn't be under the crappiest paid.
From some anonymous guy on the internet who is doing the same thing...
I'd go with, google search your industry, position, and experience for salary... Pick the low end of the range, and POW! "Reasonable Salary". You can be the crappiest paid, but you shouldn't be under the crappiest paid.
From some anonymous guy on the internet who is doing the same thing...
Posted on 7/2/19 at 9:09 am to Cousin
SurePayroll, ADP, PayrollSuccess, or any payroll processing other company will do it. Most will handle the state/fed payroll tax remittances too.
Posted on 7/2/19 at 9:19 am to Cousin
Man, sorry about that, I totally misread that. I used Medlin software. $65/year. That gets all your payroll things worked out at the least expensive I've found. Then I just transfer anything that isn't dividend/draw to my personal account. I do the same for dividend/draw, but that's outside of payroll and ends up on the K-1.
Posted on 7/2/19 at 9:54 am to Cousin
I've always gone with enough to pay the bills plus a little extra.
Posted on 7/2/19 at 1:16 pm to Cousin
quote:
Any business owners with an S-corp willing to give advice on how to pay myself a "reasonable salary". I'm not too concerned with the amount but more so of how to go about paying the salary.
We use a subscription wage survey but there are also free ones. Bureau of Labor Statistics and Salary.com would both provide data if it was questioned by an auditor.
quote:
Do you utilize a certain software to do so? Can I just transfer the funds to my personal account or is there a certain way I absolutely have to go about it? Thanks in advance.
I would recommend using a payroll service (they are pretty cheap) to make sure the payroll taxes are withheld and paid properly. ADP, Paychex, Ultimate Software are some of the bigger companies. If you are using QuickBooks, they have an assisted payroll that is very cheap and easy to use. Any of the payroll services mentioned above would take care of your quarterly filings and year end reporting.
One thing to keep in mind is there are certain shareholder add-ons depending on how much of the company you own. Health insurance and personal use of auto are two examples. I would probably talk to your CPA to make sure those are accounted for.
Posted on 7/2/19 at 1:33 pm to Cousin
Quickbooks.
Posted on 7/2/19 at 2:27 pm to Cousin
Quickbooks payroll is so easy to use. If you don't want to pay for the software, consider doing things manually. An hour spent with a CPA and you can easily learn how to manually issue paychecks, make payroll tax deposits and file quarterly and annual payroll tax returns.
Just depends on how tight you are with the dollar.
Just depends on how tight you are with the dollar.
Posted on 7/2/19 at 2:30 pm to Cousin
You are expected to pay yourself a salary. With that salary you have to pay SS and Medicare. Ask a CPA to do it. What is reasonable. What you would expect to make if you were doing the same work for others. You can be on the low end but don't be obvious. The rest of any profits will flow to the owners. If it's a LLC then you have more leeway in deciding who gets the profit or loss.
Posted on 7/2/19 at 2:40 pm to Cousin
quote:
Any business owners with an S-corp willing to give advice on how to pay myself a "reasonable salary". I'm not too concerned with the amount but more so of how to go about paying the salary. Do you utilize a certain software to do so? Can I just transfer the funds to my personal account or is there a certain way I absolutely have to go about it? Thanks in advance.
Find a good CPA firm.
This post was edited on 7/2/19 at 2:53 pm
Posted on 7/2/19 at 4:05 pm to Cousin
Thanks you for the responses. Very helpful info. I appreciate you. 
Posted on 7/2/19 at 5:48 pm to Cousin
From what I understand the only disadvantage to the S-Corp is at the point you decide to sale your business. My CPA recommends that in the event I decided to leave my business I would be better off closing the doors, then having someone open as a different entity.
Posted on 7/2/19 at 10:48 pm to Cousin
We use ADP. I set my salary comparable to my industry and make much more on the K1. I don’t like payroll taxes. Also, not sure if you have to carry WC insurance, but be sure to exclude yourself unless you plan on suing yourself.
This post was edited on 7/2/19 at 10:49 pm
Posted on 7/4/19 at 9:50 pm to Cousin
I use ADP and pay myself $1k per pay period. Everything else is draws. Sounds fair and reasonable to me. 
Posted on 7/7/19 at 3:37 pm to Cousin
A little late on this, but I left for vacation and just got back... As to time, it is certainly a matter of what's worth your time. For me, it's just me and an assistant. I spend about 5 minutes a month to process payroll, less than 5 minutes a month for federal tax deposits, about 10 minutes a quarter for state filings, and 30-60 minutes a year for annual filings. So maybe 3-4 hours a year on the high side (and let's be honest, I waste WAAAY more time than this on TD). I'm pretty sure I would be spending at least some of this time reviewing the work of others anyway... Then, I have my accountant doing my books to hopefully notice any glaring errors.
Here is the cheat sheet I made for myself several years ago (personal information of course deleted) that I rarely have to update. And of course, you'll have you're own set of requirements that you can have a CPA review with you for an hour of time if you're unsure of your work...
MONTHLY FEDERAL TAX DEPOSIT:
Federal Tax, Social Security, Medicare (Form 941)
LINK /
MUST MAIL FORM QUARTERLY
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0005
QUARTERLY PAYROLL TAX INFORMATION:
STATE TAX WITHHOLDING: JANUARY 31, APRIL 30, JULY 30, OCTOBER 30TH
LINK /
File L-1
Pay State Withholdings
SUTA:
LINK
ANNUAL FILING REQUIREMENTS:
STATE:
LINK
File L-3 (IN JANUARY: W2/L3 ANNUAL RECONCILIATION)
Manually Enter W-2 Information
FEDERAL:
LINK /
Submit Forms W-2/W-3 Online
FUTA (Form 940)
LINK /
Without Payment:
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0005
eta. the previously mentioned Medlin software creates all the forms necessary to submit all these filings.
Here is the cheat sheet I made for myself several years ago (personal information of course deleted) that I rarely have to update. And of course, you'll have you're own set of requirements that you can have a CPA review with you for an hour of time if you're unsure of your work...
MONTHLY FEDERAL TAX DEPOSIT:
Federal Tax, Social Security, Medicare (Form 941)
LINK /
MUST MAIL FORM QUARTERLY
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0005
QUARTERLY PAYROLL TAX INFORMATION:
STATE TAX WITHHOLDING: JANUARY 31, APRIL 30, JULY 30, OCTOBER 30TH
LINK /
File L-1
Pay State Withholdings
SUTA:
LINK
ANNUAL FILING REQUIREMENTS:
STATE:
LINK
File L-3 (IN JANUARY: W2/L3 ANNUAL RECONCILIATION)
Manually Enter W-2 Information
FEDERAL:
LINK /
Submit Forms W-2/W-3 Online
FUTA (Form 940)
LINK /
Without Payment:
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0005
eta. the previously mentioned Medlin software creates all the forms necessary to submit all these filings.
This post was edited on 7/7/19 at 4:05 pm
Posted on 7/8/19 at 9:39 pm to Cousin
Quickbooks can handlebookkeeping and payroll but is not that cheap anymore. Any cheap payroll software that can handle preparing and filing payroll returns. Also you can register with EFTPS (electronic federal tax payment system) for making tax deposits.
Posted on 7/9/19 at 5:07 am to Cousin
My CPA has told me to keep it at 60-40 ratio for salary - distributions. Don’t know why other than she says that’s what keeps the IRS happy.
Posted on 7/9/19 at 5:48 am to Cousin
By the way, congrats on the business (actually to all of you).
After working for myself for 10 years, then going back into regular wage employment for the last 4, I’m diving back in again (slowly anyway).
My advice - you will have some stumbling blocks out the gate when starting - with payroll and salary. No worries, you’ll learn.
If you have a very small business (you and a handful of employees or independents), go with QuickBooks (or another, up to you) until you think you need more. Very easy to use. With the salary, my CPA always told me to be accurate and steady in what you pay yourself - keep track of your expenses, and even if you can’t afford to cash your expense or salary check . . . at least cut them until you can cash them.
When I first started, it gave me the incentive to work my arse off.
After working for myself for 10 years, then going back into regular wage employment for the last 4, I’m diving back in again (slowly anyway).
My advice - you will have some stumbling blocks out the gate when starting - with payroll and salary. No worries, you’ll learn.
If you have a very small business (you and a handful of employees or independents), go with QuickBooks (or another, up to you) until you think you need more. Very easy to use. With the salary, my CPA always told me to be accurate and steady in what you pay yourself - keep track of your expenses, and even if you can’t afford to cash your expense or salary check . . . at least cut them until you can cash them.
When I first started, it gave me the incentive to work my arse off.
This post was edited on 7/9/19 at 5:50 am
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