If I took no distributions from a 100% owned S-Corp, do I need to pay myself wages? The S Corp started 6 months ago and earned about $50K last year. I didn't set up payroll and am wondering if not paying myself wages last year is ok, so long as I haven't taken any distribution. If I start payroll this year, and the wages for this year is MORE than the S Corp earns THIS year but LESS than the total cash the S Corp has (accumulated from last year), will I be paying federal income tax again on the W-2 income from the S-Corp (even though I paid the income tax on the S-Corp income last year since it was passed through to me as the shareholder last year)?
Or is there no such concept as not taking a distribution in a S-Corp since it is all pass through and I am paying income tax on the net income whether or not there is a distribution from the S-Corp. (in which case I may be in trouble since I did not do payroll in 2016).
