how to pay myself with the least amount of tax?

Question

i am co-owner of a s-corp where, my parnter and i are 50/50. we currently need to pay ourselves 12,000.00 per month. we have payroll set up at 4,000.00 per month with ADP each, but the other 8,000.00 is needed to be allocated as best it can without high tax consequences. we do expense about 3,000-4,000.00 as "expenses" and 333.33 goes to a roth, and about 1,000.00 goes to simple IRA, but what about the rest... what are your guys recommendations as to where to "pay" ourselves without actually being paid and taxed up to kazoo.

all ideas, would be helpful and some direction would be greatly appreciated.

i understand the concept of it being a pass through, but how do i pass it through with minimal tax liability. sure i could pay myself the 12,000.00 each month as income, but that tax bracket is unacceptable. for instance. my company pays for my car, along with other "expenses", these aren't taxed... i hope that made sense. i am asking if there is any other ideas of how to pull money as "income" without it looking like income. again, i don't need it completely liquid as i need it in my pocket that day, i am willing to do additional retirement accounts, etc.

Answer 1

It isn't a moot point. It is true that an S-Corp is a pass through entity, but it is still a corporation and it's impossible for a corporation to run itself. The IRS issues guidelines which are pretty loose, I would check them out for their suggestions. The other source offers some more insight into your problem.

Answer 2

It's a moot point, really. An S Corp is just a pass-through entity. You must pass the income through to the shareholders in full every year even if you don't distribute the income to them. The only way you'll lower your tax bill is to lower your income. That just doesn't make any sense!

Don't make business decisions based solely on taxes! Keep them in perspective. Even if you're at the highest tax bracket, you still keep 65 cents of every dollar made.