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I have my own s-corp and I primarily pay myself through shareholders distributions. However, I do get issued a "reasonable salary" through a payroll service. This service issues me a monthly statement, pay report, and a year-end W2.
A big oversight on my part but I have never paid myself the funds reported on the W2. I'm wondering what the best way to correct this is, for 2022. I don't need the funds, could I count/record them as a shareholder contribution -- so it reduces my overall yearly distribution?
Have you been paying the payroll taxes computed by payroll service -- FICA, FUTA, SUI, FIT and SIT?
IRS requires S-Corp owners pay themselves an annual salary each year (including paying payroll tax), reasonable amount, before paying yourself Distributions (which are only income taxed -- FIT and SIT).
Yes, assuming you paid and filed the payroll taxes correctly, the net pay that was left in the business can be booked to your Additional Paid-In Capital/Shareholder Contribution equity account.
@Rainflurry Thank you! Yes, all mentioned taxes were taken out of payroll. This solves that.
What are the steps to execute this? I have taxes withdrawn 3rd party and need to document my net pay. I just don't understand what buttons to click
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