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joe-rubio101
New Member

I have an S-Corp (2 owners/officers) starting to generate revenue, what percentage should be officers distributions versus W2 (lowest possible)? Using $8000 for example

 
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bwa
Alumni
Alumni

I have an S-Corp (2 owners/officers) starting to generate revenue, what percentage should be officers distributions versus W2 (lowest possible)? Using $8000 for example

There is no one answer to your question.  The IRS only expects that shareholder's be paid a reasonable salary for the services they perform before any distributions are made to owners.  There is no magic formula or IRS guide for reasonable salary.

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2 Replies
bwa
Alumni
Alumni

I have an S-Corp (2 owners/officers) starting to generate revenue, what percentage should be officers distributions versus W2 (lowest possible)? Using $8000 for example

There is no one answer to your question.  The IRS only expects that shareholder's be paid a reasonable salary for the services they perform before any distributions are made to owners.  There is no magic formula or IRS guide for reasonable salary.

View solution in original post

TaxGuyBill
Level 9

I have an S-Corp (2 owners/officers) starting to generate revenue, what percentage should be officers distributions versus W2 (lowest possible)? Using $8000 for example

It also depends on what the business is doing, if there are employees or equipment earning money, etc.

In my opinion, in a business that only provides services and there are no employees or equipment 'working' for the business, ALL (or almost all) of the profit should be wages.
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