Dividend Distribution

Know the ins and outs of “reasonable compensation” for a corporate business owner

C Corporations, Compensation, Small Business, Tax, Tax Planning / Douglas Freeman

Owners of incorporated businesses know that there’s a tax advantage to taking money out of a C corporation as compensation rather than as dividends. The reason: A corporation can deduct the salaries and bonuses that it pays executives, but not dividend payments. Thus, if funds are paid as dividends, they’re taxed twice, once to the […]

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Do you want to withdraw cash from your closely held corporation at a low tax cost?

Closely Held Corporations, Corporations, Small Business, Tax, Tax Deduction, Tax Planning / Douglas Freeman

Owners of closely held corporations are often interested in easily withdrawing money from their businesses at the lowest possible tax cost. The simplest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax-efficient, since it’s taxable to you to the extent of your corporation’s “earnings and profits.” And it’s not deductible

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