Small Business Forum

Go Back   Small Business Forum > SMALL BUSINESS ADVICE > 03 - Accounting & Taxes
Register FAQ Members List Calendar Search Today's Posts Mark Forums Read

03 - Accounting & Taxes Accounting Help & Tax Strategies

Thread Tools Display Modes
Old 11-28-2008, 11:43 AM
bubbatex bubbatex is offline
Registered User
Join Date: Apr 2007
Posts: 44
Default S-Corp Year End Cash - Reserve or Payout?

I am half of a 2 man S-Corp. We do IT consulting, so it is basically cash in, payroll out after a few monthly expenses. We have been paying ourselves at a consistent rate this year as we have looked at our pipeline - giving ourselves raises as the year progressed. Now as year end approaches, we could conceivably have $20-30K extra after our December payroll in the bank. My accountant told me to do a year end payroll to clear out the majority of the rest - carrying very little over (we were leaner last year and ended up with $10 at year end). I understand this strategy from a payroll tax standpoint since we have met our SS/Medicare limits for the year, but we roll into the new year with no reserves and business is slowing down. I guess whether it is in the business account or my bank account, it does not matter - but if I leave it in the business, do we sort of get double taxed?

I am just asking for a "second opinion". Like my accountant, but she is not always easy to pin down.
Reply With Quote
Old 02-07-2009, 11:41 AM
kmccorma kmccorma is offline
Registered User
Join Date: Feb 2007
Location: Northern Virginia
Posts: 26

You and your partner have to pay tax on this remaining cash on your personal 1040 so you might as well do a distribution to yourself.
Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is Off
HTML code is Off
Forum Jump

All times are GMT -5. The time now is 06:43 PM.

Powered by vBulletin™ Copyright © 2011 vBulletin Solutions, Inc. All rights reserved.