Am I the only one who thinks the seer in Julius Caesar who said, “Beware the Ides of March.” was a genius!? Not only did he warn Caesar of his impending assassination but he warned about Corporate Tax deadlines as well! March 15 is the deadline for Partnership and S Corp taxpayers. It is also the deadline to file Form 7004 to request an automatic six-month extension of time to file.
Many businesses elect to be S Corp for tax filing purposes. It can save them money! One thing I always remind my clients is that they should pay themselves a salary if they provide more than minor services to their corporation. Most business owners provide major services to their corporation so they should be receiving reasonable compensation.
The IRS suggests you look at these factors to determine a reasonable salary: duties and responsibilities, time devoted to the business, training, dividend history, and payments to employees who are not shareholders.
Also, just look around you and see what people doing the same work in a similar business structure are being paid.
The IRS is VERY aware that is a hot issue and many audits and penalties have come from it. Be sure you aren’t side stepping this requirement or Caesar won’t be the only one who should heed the seer’s warning!
Jordan Ilderton, CPA