A follow-up to your responses:
- If your S corporation is just breaking even or experiencing small losses, you don't need to worry about the payroll matter at the moment.
- Having said that, if audited, the IRS may scrutinize this as being more of a hobby. Just keep that in mind.
- Once you do begin to be at the point where you are making $$, and are able to pay yourself, just make sure you pay yourself a wage (W-2) and not just distributions (and not with a 1099-NEC). You may want to get some tax advice from a professional at that point. Not only for guidance on a reasonable amount, but you may need help with the payroll tax matters.
- The key is that the IRS doesn't want to see all distributions and no wages being paid out by the S corporation. No wages, or small wages, can potentially lead to an IRS trigger point
*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.
