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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 11:49 am to TheOcean
quote:
I've always gone with enough to pay the bills plus a little extra.
Lol, yeah I wouldn't do this.
But as said above my CPA basically told me to low ball also.
Plenty of CEO's are paid well under $1 mil in salary and get millions in stock options.
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 2:02 pm to BamaAlum02
quote:
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.
Quickbooks is not cheap, its not expensive but its something like $800 a year for the payroll version. It goes up substantially with the number of employees, something like $4 per employee per paycheck then there are other fees also.
Also, not sure how much you are making OP but I just went through this myself. Most of the payroll companies require about 2500/ week in payroll to work for you. Their costs start about 2.5% and go up from there depending on your needs.
So you are looking about $3000 to outsource with someone reputable. My CPA was about the same FWIW.
This post was edited on 7/2/19 at 2:03 pm
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 4:18 pm to baldona
quote:
Quickbooks is not cheap, its not expensive but its something like $800 a year for the payroll version. It goes up substantially with the number of employees, something like $4 per employee per paycheck then there are other fees also.
In the context of my post I was referring to being cheap compared to the other software providers I mentioned (ADP, Paychex, etc.)
In response to your post, $800 a year is pretty cheap to me (about $67/month). Miss 1 or 2 federal withholding deposits and your penalty will be higher than that. Even if I can run it in an hour per month, my time is worth more than that not to mention the piece of mind that they are handling the reporting. I guess it all depends on how much your time is worth to you.
Posted on 7/2/19 at 4:25 pm to BamaAlum02
^^^ What he said. As an S-Corp you’re a W-2 employee. You have to have withholdings and pay them on schedule.
We are an LLC treated as an S-Corp.
We are an LLC treated as an S-Corp.
Posted on 7/2/19 at 4:56 pm to BamaAlum02
quote:
In the context of my post I was referring to being cheap compared to the other software providers I mentioned (ADP, Paychex, etc.)
I know and I agree with everything you said. That's why it costs what it costs.
If you compare it to something like Microsoft Office that you can get for like $150/ year and does about 1 million more things its expensive.
Its not "expensive" but it does blow me away because you have all these guys like landscapers that are doing $80k gross a year. $800/ year to them is a LOT.
There are a couple cheaper options, but the Quickbooks is the best if you use quickbooks.
Posted on 7/2/19 at 5:27 pm to VABuckeye
You must apply to the IRS to recieve an S-Corp designation. It took about 3 months to receive mine.
Posted on 7/2/19 at 5:29 pm to shoestring
Yep. Did that many years ago.
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 6:14 pm to shoestring
It depends if you have a business that can really be sold. My business is built around me and my contacts and expertise. Unfortunately, unless I replace myself there isn’t a ton of value in a business like mine. Great for me but not for a buyer.
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