3 ms·
This is incorrect, at least for for an S Corp. The rest of the money (after you pay salaries AND deduct valid business expenses) is distributed to shareholder(s
by jazzyk 11y ago
This is incorrect, at least for for an S Corp. The rest of the money (after you pay salaries AND deduct valid business expenses) is distributed to shareholder(s) as shareholder distributions using Schedule K-1, not dividend (terminology is important, they are not one and the same).
Shareholder distributions then add (or subtract if you lost money) to/from shareholder individual incomes. It is taxed at the same level as other income.
- zrail 11y agoOne important point that people tend to ignore/forget: every dime of income after salaries and expenses counts as a distribution for tax purposes, even if the money stays in the company bank account. Shareholder/member distributions are not taxable events.