regardless of size officers/shareholders involved in the operation of an S-Corp are supposed to take a reasonable salary. this requires registering with the iRS (and maybe also state) for filing quarterly payroll tax returns 941s and any state unemployment compensation returns then an annual 940, W-2s,,W-3s.
Distributions are not compensation but a return to the owners of profits after expenses including wages to officer/;/shareholders been paid. if you have not filed or registered for these returns run to a tax professional. there can be substantial penalties for failure to file and withhold required taxes.
issuing a 1099 for compensation is not adequate since employees do not get 1099 but w-2s
