I am the owner of a S Corp franchise. My fiance does the work, and I own the company. Since we live together and all of our money goes toward common bills mortgage, utilities, food, etc. Am I required to treat him as an employee or can we draw off the business once the business is off the ground?====>It is up to you; as you can see, An S corp is taxed on a pass-through basis, meaning it doesn't pay taxes in its own right. In principle, an S corp can have no employees. However, in practice payments to its officers may be classified as wages, with tax implications.You as an owner/shareholder/ employee are still responsible for paying FICA taxes that help fund Social Security and Medicare payments, along with unemployment insurance contributions. The corp must also withhold income tax from you, an employee salaries and pass the money on to the IRS.The S corp may have no employees in the traditional sense of a person who works for the business but has no ownership stake. However, for tax purposes, any shareholder who performs duties for the business may be treated as a shareholder-employee. The money the shareholder receives in dividends may be treated as income and thus create a liability for employer taxes.
I am worried that being forced to pay him as an employee with all the taxes is causing a real issue with us getting the company off the ground.===>I donot think so ass aid |