The cpa that im going to use told me the same thing in the last paragraph you mentioned. However, he told me that if I put myself and my partner on a payroll so that we have a salary whether it's hourly or not, I would only be paying taxes on what I pay myself from the business (salary) and I would not be paying taxes on the 50/50 split profit share. Is this correct?
In other words as an example if my partner and I are on payroll, we give ourselves a salary of 15,000 a year each. Business made 70,000 after expenses, we would file the 1065 form for the 70,000 but because we pay ourselves 15,000 each, we pay taxes (w-2) on our salary. The 70,000 would not be taxed because we didn't use it.
Correct?
