No salaries for a domestic eligible entity to be calssified as an association taxable as a corporation

[WJordelCPA]

No salaries for a domestic eligible entity to be classified as an association taxable as a corporation, should I insert a note to 1120?  The reason there are no salaries is this business is just beginning and planning on utilizing it once the business gets up and running.

[JulieS · Accepted solution]

No, you don't need to include a note. It is very common for a new corporation to not have any payroll in the few year or two. 

That being said, if you have a profit, you should start payroll as soon as it it is practical to do so. If you file three years with a profit and no payroll, you are very likely to be audited because of it. 

[WJordelCPA]

Thanks so much.