I recently started my own S Corporation and have a couple of clients. So I set up a bank account in the company’s name and deposited my first payment for services in the account. So now how do I go about paying myself in the easiest manner possible? I have no other employees, just myself. I have already figured out a reasonable salary for myself and the rest I will take as dividends. I just need to know how to figure the taxes and what not when I pay myself and how and when I should transfer this to the IRS. Any URLs that detail this procedure would be most helpful too.
I just cut myself a check from the business account, and deposit it in my personal account. Or, when I’m making a deposit for the business, I ask a teller to transfer funds from the business account to my personal account.
I can’t recommend the services of a good accountant highly enough. It relieves a lot of headaches and I don’t have to worry about tax issues. It would be a good idea to at least have a consultation with a CPA. They can help you to prevent costly errors when dealing with the IRS.
We wrote ourselves payroll checks wherein we deducted income tax withholding and FICA. And we made regular monthly 941 deposits, 940 when required and filed quarterly reports with both the IRS and the state (Texas Workforce Commission). Consult a CPA and they’ll be able to get you set up on that if you have questions that are not answered by the government publications.
My CPA advised us that the IRS would remain happy if we kept the ratio of payroll to dividends at 1:1.
