Paying S-Corp Owner Directly from Main Bank Account


2

I run a small US-based startup, (an S Corp), I am also a contractor of this business.

Am I able to withdrawl money from the main business banking account and pay myself (a contractor) without writing a check up?

I will, of course, document these payments on both ends when taxes come around.

I recognize a check is more traditional, but it seems silly to write myself a check everytime I pay myself.

Thank you for any input!

Independent Contractor Accounting S Corp

asked Jul 16 '12 at 06:22
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User1062058
22 points

2 Answers


1

How you withdraw money, technically, is of no importance.

But you have to pay yourself a reasonable salary. You cannot pay yourself as a contractor for work performed for your S-Corp. Yes, it means you'll have to pay payroll taxes and expenses.

answered Jul 16 '12 at 09:15
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Littleadv
5,090 points
  • Thank you for your answer. I'm a bit confused though; how can I "pay" myself then? As a regular W-2 employee? – User1062058 8 years ago
  • @user1062058 - yes, precisely. You **must** pay yourself a salary, i.e.: you must be your own corporation's W2 employee. – Littleadv 8 years ago
  • Okay, great. I will be a W2 employee and use a check to pay myself each month. To handle this payroll on both ends, I'm going to try quickbooks until I get the hang of what the forms and calculations are. Is this a good plan? Thank you for you help. Also, your blog site is very nice. – User1062058 8 years ago
  • @user1062058 I would suggest paying some for a payroll service. IRS can be very nasty if you make mistakes with withholdings and payroll tax forms, and it is a deductible business expense for your corporation. – Littleadv 8 years ago
  • Okay, thank you for that. Will Quickbooks suffice for the payroll service? – User1062058 8 years ago
  • Quickbooks has a payroll module, they charge $20 a month for usage IIRC. Its basically the same service @Keith mentioned, provided through your QB. – Littleadv 8 years ago
  • Okay, thanks. I just have one more question. This is a new business as of the beginning of the year. Starting from the beginning of the year, I have not paid myself as a W2 employee, I just took money from the business account to pay myself as a contractor (didn't withhold anything). I have also not done estimated taxes yet. If I just start paying myself as a W2 and pay estimated taxes as soon as I can, will that be okay with the IRS? – User1062058 8 years ago
  • @user1062058 you should really get a real tax professional to help you, its hard to gather all the relevant information through post comments and I don't want to tell you something that is incorrect. If the corporation is at a loss then you're good, even without paying yourself salary. But if the corporation has net income, then you might be in some underpayment troubles which a good tax pro will help you figure out quickly. Don't forget to read my disclaimer in the info, this is not a tax advice and you cannot rely on anything I write here as a covered opinion. – Littleadv 8 years ago

1

As mentioned, you're an employee so you need to take funds out of your s-corp as an employee. I'd recommend using Intuit Online Payroll to pay yourself as an employee. For Costco members, it's about $25 per month ($39 if you purchase from their web site) for up to 5 employees.

Intuit will help you setup yourself as an employee, enable you to perform really easy direct deposit pay checks with all the proper payroll deductions, do all the federal and state filings for you (with simple email approval reminders), and issue you a W2 at the end of the year. It's a very slick, easy to manage system that takes all the headaches and worries out of employee payroll.

I don't work for Intuit, so there's no conflict of interest on my part. My company publishes employee time and attendance software (Virtual TimeClock). We regularly help customers that are just getting into business and they often ask about moving employee timecards from our software into an easy payroll solution. We've found no better service for startups looking for easy, quick, cost effective employee paychecks.

HTH.

answered Jul 17 '12 at 08:00
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Keith De Long
5,091 points
  • There are many service providers, and local EA/CPA firms can do it as well. I'd suggest doing some shopping around to get the best option. But that said, I do like Intuit products, and use them a lot (they're the ones behind Mint, Turbo Tax, QuickBooks, and various professional programs like Lacerte and ProSeries). – Littleadv 8 years ago

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