Business Opportunities Weblog

Entrepreneurs Who Pay Themselves Too Much or Too Little Will Find Tax Trouble

By on September 30, 2004 in Ideas

Law & Entrepreneurship News: “Related to my two earlier posts regarding the IRS’s case against John Menard for taxes and penalties owed because he payed himself a salary that the IRS considered so high that much of it was actually a dividend (thus making the corporation as well as the individual taxable), the Milwaukee Journal Sentinel has a story describing the tax troubles entrepreneurs can find themselves in if they pay themselves too much or too little, and ways to avoid such problems.”

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Business Opportunities Weblog editor and publisher Dane Carlson lives in the Sierra Nevada mountains of California, just 15 miles from Yosemite National Park. He accidentally became a professional blogger in 2001. He has added 12,208 posts to the site.

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  • http://1sthowtoworkathome.blogspot.com Chuck

    Paying oneself too much?

    There has to be a reason…Aha! After Social Security is no longer taken at 15%, a dividend can be taxed to the corporationa as a profit.

    This is obviously just a money grab.

    I don’t know what type of corporation this individual had, but an S Corp passes all profits as “income” or “salary”.

    Normally the concern is when a business shows NO salary and you ask “how does this person live?”

    Another case of darned if you do and darned if you don’t.