Discussion:Start up of S corportation

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Discussion Forum Index --> Tax Questions --> Start up of S corportation

Orbinex (talk|edits) said:

29 November 2005
I have some questions regarding a S corp with 3 corporate officiers:

1. How to allocate funds to corporate officiers?

2. Can we create a note payable and pay back one officier?

3. Is it better to draw a salary or 1099 an officier?

Silas (talk|edits) said:

30 November 2005
Your first question is not clear. What are the funds you want to allocate.

Question 2. -- In order for an S Corporation to report a note payable from an officer, that officer must personally be liable for the note.

Question 3. The S Corporation should determine a reasonable salary for an shareholder/officer. Of course the salary is reported to the shareholder/officer on a W-2 and the S corporation should file employment tax return and pay applicable employment tax. Shareholders should receive a K-1 that include, among other items, their share of the corporate profit/loss. The shareholders' distributable income are not subject to self-employment tax.

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