QUESTION
Can an S-Corp exist if you cant pay for an employees salary?
Asked on Sep 10th, 2014 on Business Law - Pennsylvania
More details to this question:
I currently founded an LLC in Pennsylvania and for tax purposes I am battling between the decision to either be taxed as a Partnership or S-Corp. I understand the benefits of both and know that I would be allowed higher tax benefits by being an S-Corp through the ability to pay my salary as an employee then get a percentage of profits through ownership shares without paying taxes on it. My main question is: will I be able to file as an S-Corp if I cannot afford paying my own employee salary and other business partners employee salary?
1 ANSWER
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Your ability to afford to pay salaries to yourself or other members of your LLC will not affect your ability to file for S-status under the IRS Code. there is no relationship between the two of which I am aware. I hope I'm understanding your question correctly.
Answered on Sep 22nd, 2014 at 2:28 PM