I co-own the S-corporation (50/50 ownership with one other person). It's small and the actual operation and service we provide is only active for 7 days out of the year. The planning and preparation is longer but we planned to only take payment once a year. We don't have W-2 employees and we only have contractors that we pay one time - most contractors are paid under $600 and the few contractors who are paid more than $600 receive 1099-MISC.
Whether or not it's completely relevant - the profits / ordinary business income is modest and, in my opinion, doesn't seem to justify a payroll service. The "reasonable" amount of money for officer compensation is under $600 and the amount of ordinary business income is be on the order of $1000-$5000 depending on the year.
Questions:
(1) If my reasonable officer compensation (to myself and to the other owner) is under $600 per officer can I pay it and not do any specific or special reporting? Obviously that income would get reported on my personal income taxes and I would pay tax on it based on my income bracket
(2) If my reasonable officer compensation is above $600 per officer, could/would/should I report it with a 1099-MISC? That income would then also still get reported on my personal income taxes and I would pay tax on it based on my income bracket.
(3) Do I have to issue a W-2 and pay payroll taxes regardless of the amount and frequency of officer compensation?
