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Level 1

3 member LLC S corp salary vs owner pay

There are 3 owners LLC taxed as an S Corp.  Only one of the owners works fulltime on the company.  We need to start paying out salary to him.  I know you can add him as an w-4 employee, but what would the other option of paying him.  Can we pay him as a vendor to avoid payroll taxes?  Would there be any tax consequences?

1 Comment
QuickBooks Team

3 member LLC S corp salary vs owner pay

Welcome to the Community, @llc learn.


I'd like to redirect you to the best support group to get this addressed right away.


While we don't advise about tax consequences, I suggest reaching out to the IRS. This way, they can recommend which payroll taxes should be deducted to the owner who works full-time.


You might want to check out this article from the IRS to know more about tax consequences: Tax Consequences of Plan Disqualification.


As always, feel free to visit our QuickBooks Community help website if you need tips and related articles in the future.


Please keep in touch if there's anything else I can do to help you succeed with QuickBooks. I've got your back. Have a great day!

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