Income and Salary to an S-Corp Owner

Owners of s-corporations are quickly introduced to some fairly complex tax issues.  An s-corporation has “flow-through taxation”.  This means the s-corporation itself generally pays no income taxes for its income, but its stockholders do.  The s-corporation files its own tax return.  That tax return generates a K1 that’s given to its shareholders and its shareholders report and pay the taxes on the shareholders’ personal tax returns.  But the shareholders may also be required to pay themselves a salary if they are also employees or otherwise perform services for the corporation.  Continue reading “Income and Salary to an S-Corp Owner”