Page 2 of 2 FirstFirst 12
Results 11 to 15 of 15

Thread: Paying dividends to myself

  1. #11
    Registered User
    Array
    Join Date
    Mar 2015
    Location
    Beaver Falls, PA
    Posts
    835
    Thanks (Given)
    0
    Thanks (Received)
    4
    Likes (Given)
    17
    Likes (Received)
    103

    Default

    My taxes just came back from my accountant today. I will try and look and see what they did with my distributions on my taxes. I have a pretty top notch accountant and am an S-Corp.
    Ray Badger, Turbo Technologies, Inc.
    www.TurboTurf.com www.IceControlSprayers.com

  2. #12
    Registered User
    Array
    Join Date
    Apr 2018
    Posts
    1
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    Quote Originally Posted by tallen View Post
    Yes, agree with Ray, you have to pay yourself a reasonable wage before you take any distributions.
    What is the "reasonable" wage?

  3. #13
    Registered User
    Array
    tallen's Avatar

    Join Date
    Dec 2012
    Location
    New Hampshire & Maine
    Posts
    537
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    31
    Likes (Received)
    102

    Default

    What is a "reasonable" wage? Something that is not going to raise IRS suspicions that you are trying to skirt the system. Consider what the going rate is if you had to hire somebody to do the work that you do as the manager of your business. You might look for statistics on average salaries and wages for your industry (or similar industries) in your area. You don't have to pay yourself the top rate, but you do want to be close to the market range (at the bottom, not well below it).

  4. #14
    Registered User
    Array
    Join Date
    Mar 2015
    Location
    Beaver Falls, PA
    Posts
    835
    Thanks (Given)
    0
    Thanks (Received)
    4
    Likes (Given)
    17
    Likes (Received)
    103

    Default

    One way to determine reasonable wage is as tallen suggested. Way back I took the smallest wage I could since I wanted to have as much money in the business to grow it as possible and my accountant told me I could not do that. I do have a dozen employees. My accountant tells me that I have to pay myself more than I pay anyone working for me. I think the number could vary on the size and profitability of the business and other factors. With very little information to go on I would suggest 50K to be about the smallest reasonable wage. More if you are in NYC, the Silicon Valley and etc.
    Ray Badger, Turbo Technologies, Inc.
    www.TurboTurf.com www.IceControlSprayers.com

  5. #15
    Registered User
    Array
    tallen's Avatar

    Join Date
    Dec 2012
    Location
    New Hampshire & Maine
    Posts
    537
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    31
    Likes (Received)
    102

    Default

    Ray's $50K salary number works out to a wage of about $25 per hour (assuming 50 weeks at 40 hours/week). Obviously if your business is a side-line to your day job, or only a part-time commitment, or seasonal in nature, make appropriate adjustments (in which case an hourly wage might be more useful way to approach the problem).

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •