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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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Employers: Be aware (or beware) of a harsh payroll tax penalty

100% Penalty, Employment Tax, Federal Income Tax, Internal Revenue Service, Social Security, Trust Fund Recovery Penalty / Douglas Freeman

If federal income tax and employment taxes (including Social Security) are withheld from employees’ paychecks and not handed over to the IRS, a harsh penalty can be imposed. To make matters worse, the penalty can be assessed personally against a “responsible individual.” If a business makes payroll tax payments late, there are escalating penalties. And

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