As an S-Corporation you are required to pay yourself a "reasonable salary" and report appropriate payroll taxes. This does not affect your basis (value of) in the business. You can only take a distribution up to the amount of your basis in the business and your basis is affected by your contributions, distributions, and the company's net income(loss) for the year.
See Should I pay myself a salary as an S-corp owner? for more information.
So for example, if you started your business in 2022 and if your paid-in capital (contribution) for 2022 was $10,000, your business net income was $25,000, your gross salary paid to yourself was $30,000, and your distributions for 2022 were $28,000 your basis at 12/31/22 would be $7,000 (10,000 + 25,000 - 28,000 = 7,000). If you make no contributions in 2023 and your business reports a $10,000 loss, you are not eligible to take any distributions regardless of your payroll for 2023 because your basis in the business is $0.
@SCORP2
[Edited 02/10/23 | 10:57 AM PST]
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