I'm an officer & shareholder in a small-business C-Corp. I do not have sufficient business income to take a regular salary. I would like to pay myself an occasional bonus when business income allows it.
Here are all the options I'm aware of for compensation:
- pay myself a salary, reported on form 1120 line 13 "salaries and wages"
- pay myself officer compensation, reported on form 1120 line 12 "compensation for officers"
- distribute myself a dividend.
I familiar with dividend distributions, and how to report them (1099-DIV, goes on your form 1040). It's easy for reporting but it's double taxed, and it doesn't include any FICA taxes so won't help me build up my Social Security.
So I'm seeking more information on salary and officer compensation and feasability for this once/year bonus.
First what's the difference between salary (line13) and officer compensation (line12)?
Either way, salaried bonus, or officer compensation, I'm certain this is income subject to FICA taxes and withholding and I'm not familiar with how to report such an infrequent event, this not being a monthly thing. The C-Corp so far has no employee and hasn't had to withhold and deposit any employment taxes.
The IRS says about FICA and income tax withheld "There are two deposit schedules, monthly and semi-weekly. If you fail to make a timely deposit, you may be subject to a failure-to-deposit penalty".
A once a year bonus does not fit that monthly/semi-weekly schedule. How do I do this?
