@Critter is absolutely correct in that you need to find a tax professional that you are comfortable with to get you started down the right path.
In addressing your general question on impact:
- Wages paid to you will be deducted as an expense and lower the reported taxable income to the shareholder(s). This part is almost a wash; no W-2 income to report, however, higher income from the S corporation vs reporting W-2 income and lower S corporation earnings.
- The S corporation will now be paying 1/2 of your SS. Currently neither you or the S corp are paying into SS system.
- Not paying yourself wages could cause a higher risk of being audited by the IRS. This is a highly scrutinized area for the IRS
- Make sure you discuss other fringe benefits that impact a 2% or more shareholder
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
