Say you're the sole shareholder of an S-Corp which, not including your salary, has $200,000 in the bank on Dec. 31. You have two ways to put that money in your

Say you're the sole shareholder of an S-Corp which, not including your salary, has $200,000 in the bank on Dec. 31. You have two ways to put that money in your pocket: either a) pay yourself a salary as an employee (say, $75,000) plus the remaining $125,000 as corporate profits, or b) just give yourself, as the sole shareholder, all $200,000 as corporate profits. With option b), significantly less money will end up in Uncle Sam's pocket. I happen to agree with you that that's a good thing, but the fact remains that the IRS considers it tax evasion. So not a good thing to engage in. S-Corp owner/employees have to pay themselves what the government agrees is a reasonable market wage before they can start banking relatively lightly taxed corporate profits.