*Did you know small businesses often overpay their taxes by as much as 30%?* Common pitfalls include: - Not fully understanding deductions - Using the wrong filing status - Poor or no tax planning - Navigating a complex tax code If your business is profitable and you want to pull money out in a tax-efficient way, electing _S-corp status_ can be a game-changer—potentially saving you *thousands* each year. *Ready to Maximize Your Tax Savings?* 1. *Schedule a FREE Call with a Tax Professional:* https://go.truic.com/4hWpVow (Discover exactly how much you can save) 2. *Create an S Corp with Northwest:* https://go.truic.com/3ZSZZl2 3. *Learn More About S Corps:* https://howtostartanllc.com/what-is-an-s-corporation *Take action now to keep more of your hard-earned profits!* If you use our discount links, you get a discount and we receive a small commission. Thanks for supporting our work! -------------- All S corp owners must pay themselves a 'reasonable salary' in order to compensate themselves, but what does the IRS consider reasonable compensation? This video guide will explain how to determine your S corp reasonable compensation and how to pay yourself as an S corp. ----------------- *TIMESTAMPS* 0:00 Intro 0:53 1. What is an S Corp? 1:20 2. How Owners Get Paid 2:23 3. What is a Reasonable Salary? 3:21 4. Exceptions 4:09 5. How to Calculate Your Salary 5:09 6. Resources 6:13 7. The 60/40 Rules 6:51 8. Salary Taxes 8:31 9. Example Salaries 8:31 10. Is an S Corp Right for Me? ------- 🎯 Key Topics Covered: S-Corp Payment Structure S-Corp owners receive compensation in two forms: salary and distributions. Salary is subject to both employment and income tax, while distributions are only subject to income tax. The IRS requires owners to take a "reasonable salary" before taking any distributions, making this determination crucial for tax compliance. Determining Reasonable Salary The IRS requires that salaries reflect market standards and be comparable to what you would pay someone else doing your job. Key factors to consider include: - Job responsibilities and duties - Training and education requirements - Years of experience - Time commitment (part-time vs. full-time) - Geographic location and cost of living - Industry standards - Company's dividend history Research Resources The video recommends several tools for determining market-rate salaries: - Glassdoor: Access to real salary data from current and former employees - Bureau of Labor Statistics: Government database with comprehensive wage data - Compensation consultants: Professional assistance for accurate salary determination Common Myths Debunked The video addresses the "60/40 rule" myth (taking 60% as salary and 40% as distributions), warning that this arbitrary formula isn't recognized by the IRS and shouldn't be used to justify salary decisions. Tax Requirements Detailed breakdown of required tax forms including: - W-2 for wage reporting - Schedule K1 for shareholder income - Form 1040 for personal income - Form 1120S for S-Corp returns - Forms 940 and 941 for employment taxes Exceptions to Reasonable Salary Cases where reasonable salary requirements might not apply: - When not taking distributions - When net profit is lower than reasonable compensation - When opting to take neither salary nor distributions 🏷️ Tags: #SCorp #BusinessTaxes #ReasonableSalary #SmallBusiness #PayrollTax #TaxPlanning #BusinessOwnership #IRS --------- 🧮 S-Corp calculator: https://howtostartanllc.com/start-an-s-corp/s-corp-vs-llc-calculator 🎥 S Corp vs LLC https://www.youtube.com/watch?v=PYGZ8c0yJDk 🔥 At TRUiC we are dedicated to providing the most useful information for small business owners, and would love to see your feedback in the comments on what other information you need to help follow your entrepreneurial dreams. #scorp #distributions #taxes #SCorpExplained #BusinessTax #Entrepreneurship #SmallBusiness #TaxPlanning #BusinessTaxation #SmallBusiness #LLCTaxation #EmploymentTax #BusinessStructure #TaxStrategy #truic