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I am the owner and only employee of my company. I made $30k profit this year and haven't paid myself anything so far. I want to pay myself $6k salary and $6k bonus to and be compliant with IRS.
How do I do a 1 time payroll check. If I add myself as an employee and give myself $6k salary and try to run a payroll it is dividing that by 12 months and only trying to pay me a few hundred dollars?
This is not compliant with the IRS: "I want to pay myself $6k salary and $6k bonus to and be compliant with IRS. "
You cannot take the equal amount as Bonus and underpay yourself. To Comply = Market Based reasonable compensation for services performed.
"How do I do a 1 time payroll check. If I add myself as an employee and give myself $6k salary and try to run a payroll it is dividing that by 12 months and only trying to pay me a few hundred dollars?"
You don't Divide a 1-time check. It's that one check, already. You need to meet with your own CPA, because if the IRS catches this, you will be facing penalty and interest. They will recharacterize the other $6k as attempting to evade payroll taxes. That isn't legal.
The pay period must be set at monthly. That is why it is dividing by 12. Can't you overwrite the amount?
You are supposed to pay yourself a reasonable salary; which $12k is obviously not, if you worked full time in the business.
I have a full time W2 job outside of this business. This is the first time the business has made any money. I don't really have a need to get paid. I probably spend an hour every two days.
@nickbr wrote:I have a full time W2 job outside of this business. This is the first time the business has made any money. I don't really have a need to get paid. I probably spend an hour every two days.
don't get tax advice, or legal advice from unknown folks on the net, see a tax accountant
see a tax accountan
At at least $200 per hour, I'd get the free advice from the mob and look for consistency
@nickbr wrote:I probably spend an hour every two days.
So that's 183 hours per year. $12k / 183 = $65 per hour
This isn't the issue: "I don't really have a need to get paid. I probably spend an hour every two days."
You don't get this as an option, because you chose to run under an S Corp as the tax entity type. That means you are employed by the corporation. If you wanted to not deal with this issue and don't intend to comply with the payroll requirements, then you would have operated as a Sole Proprietor.
This isn't the question: "$12k / 183 = $65 per hour"
The question was taking $6k as distribution and the same as payroll = Splitting it like that. The IRS is wise to that tactic. Please see my attachment.
In addition to the resources from the IRS, I recommend reading case studies and rulings and the comments at "Reasonable compensation reports" url:
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