i have just started a s corp. there are 5 partners with equal shares, and all are board of directors. do we all need to have "reasonable salaries"? does the treasurer, secretary, vice and president need to be on payroll? also is it a conflict of interest for the owner of the company from which we rent our equipment, and personel be our treasurer?
i am quite new to business. are there any in depth websites/resources i can get info from?

Dear Charvey

It's an interesting question! Lets talk about the issues you have raised. Please note that this advise is for general situations only, and my advise is based only on your initial query only!

1. "Do we all need to have "reasonable salaries"?
The answer is not necessarily. It all depends on how much profit is generated, if any! In a case of a loss, there is no issue to worry about as the Corporation is incurring a loss, and there would be no means available as such to pay the officers reasonable salary.

In the case of a moderate profit, its debatable whether the IRS is going to query you about a reasonable salary, although I would make sure that the President at least receive some sort of compensation through payroll.

In the case of a substantial profit,( in excess of say 250k) I think you should definitely have the president as one of the officer's to be paid a substantial reasonable salary, at least 100k.

2 ." Does the treasurer, secretary, vice and president need to be on payroll?"
I would only worry about this situation if all the officers are actively participating in the business, and the business is generating substantial profits. I would consider definitely putting all the officers on the payroll in this situation, just to avoid future IRS problems, of not having reasonable compensation. In a start up company like your's, I would not worry about this issue at the moment. So, you may save payroll taxes by not having initial payroll of the corporate officers.

3. "Is it a conflict of interest for the owner of the company from which we rent our equipment, and personel be our treasurer?
No! There is no conflict of interest, as long as this is a reasonable transaction done at ARMS LENGHT! This should not be abusive and replace the salary compensation, thus avoiding social security taxes! Be Careful, make this rental transaction look reasonable, make a lease agreement and also charge rent that is at fair market value!

4. Regarding other websites, please consider using our website as your main source of tax information, as we would be happy to answer any of your questions. For detailed personal questions, please direct questions to the webmaster.

In any case, please consult your CPA for your specific situation who would be more familiar with your tax situation.
Good luck with your start up business and if you need further assistance in help we would be happy to assist you.

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thank you so much.. that got a good bit of worry off my chest.