Thread: S-Corp Wages
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Old 01-24-2013, 12:03 AM
britsteroni britsteroni is offline
LawnSite Senior Member
Join Date: Feb 2007
Location: Missouri
Posts: 334
You are correct that "reasonable salary" is the requirement. What that means is up for debate. The general idea is what would it cost you to hire someone to do your daily job? I think in this industry you could afford to be a little more aggressive. But this is something you should work out with your accountant. But know this, it is you the IRS will come after and try to re-characterize distributions to wages in order to capture the 15.3% SS taxes (not the accountant).

As far as your other questions, I don't know of many business owners who pay themselves based on commission. After all, you wear many more hats than salesman. Whatever you decide on as reasonable, you can take dividends whenever you would like. Most business owners in this industry wait towards the end of the year to see how much cash they have left due to the seasonality of landscaping and lawn care.

Just my 2 cents...
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