When you make the S-Corporation election with the IRS, you are agreeing that you will play by the rules. One of these rules is that you will pay yourself a reasonable salary that is paid to you by payroll.
FAQs
How often should I run a Payroll?
You have options when paying yourself a salary. Common payroll frequencies include biweekly, monthly, or quarterly. As a self-employed professional, it’s common that your income fluctuates. As long as you take a payroll at least once a quarter, you’re good to go! Here at Formations, we recommend either a monthly or quarterly payroll cycle for the shareholder-employee. There are advantages and disadvantages to both options. Your Customer Success Manager will help you choose the right solution for you.
I’ve been an LLC in real estate for over 1 year. I am not sure how to assign a salary when income is always different. Any advice?
Salary is defined as reasonable, and we will provide you with a reasonable compensation study. If income fluctuates month over month, you can always define one per Qtr, and make an adjustment late in Q4 once you have more clarity about the annual income.
If I set up a salary, is my salary taxed weekly?
The reasonable compensation, (a fancy name for payroll, salary, wage) needs to be defined annual and run on a monthly or quarterly basis