Do I Need To Draw A Salary?

As an employee of your corporation, you should be drawing a salary that is reasonable for the services you provide to it. The Internal Revenue Service may adjust your salary in audit if they feel it is too low (especially in the case of an S-corporation) or unreasonably high.

Any other money you draw from the corporation, including the payment of personal expenses with corporate funds, must be charged to you as dividends (taxable to you, but not deductible by the corporation) or treated as a loan (which must be repaid, and with interest if it goes over $10,000 at any point.)

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