can a C-corporation owner/employee not take a salary?
If the company is a C Corp, there is no requirement that the corporation pays owner/employee a salary. However, there are IRS guidelines that should be followed. The IRS has said that if a C corporation is distributing profits to its owners and has not hired any other employees, it should follow the 60/40 rule. This rule states that 60 percent of the distribution should be treated as salary—and thus subject to payroll taxes—and the remaining 40 percent as dividends.
and here's the link to it
https://solvencynow.com/2021/01/28/should-the-business-owner-be-on-payroll/#:~:text=If%20the%20compa...
Thus taking a dividend without a salary could possibly result in a recharacterization by the IRS.
Nor can a C-Corp accumulate profits forever without paying dividends or salary. IRC section 531 comes into play:
In addition to other taxes imposed by this chapter, there is hereby imposed for each taxable year on the accumulated taxable income (as defined in section 535) of each corporation described in section 532, an accumulated earnings tax equal to 20 percent of the accumulated taxable income. (In its simplest form taxable income is reduce by the regular taxes and the net its then subject to a 20% tax). This doesn't bar the IRS from reclassifying dividends as compensation.
basically, there is no 531 tax on the accumulation of earnings for the reasonable needs of the business of not less than $250,000. (IRC 535).
