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Re: Compensation to shareholder of S corp

How much you should pay yourself depends on a variety of factors, including what area of the country you are in, how much of the earnings of the company you generate vs. other employees, the profit of the company, and others.

However, if the company is losing money, you should be able to pay yourselves very modest, or even no salary. The IRS's concern is where there is a significant corporate profit and the shareholder salaries are very low.

What you pay yourselves once you're profitable will depend. The ADA probably has some statistics on salaries that would give you some idea of how pay yourselves. If the practice is marginally profitable (before your salaries), then modest salaries would be in order. If the practice is wildly profitable due to your and your husband's efforts, then significant salaries would be in order.

Gary

Zip Code: garyd@davisandbrandel.com