An S-corp owner pays payroll tax on salary, but not on distributions. See the potential savings.
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Payroll tax saved
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An S-corporation owner takes part of the profit as W-2 salary (subject to Social Security and Medicare tax) and the rest as distributions (not subject to those payroll taxes). The salary must be reasonable for the work performed, or the IRS can reclassify distributions as wages. This estimates the payroll tax avoided on the distribution portion. Consult a CPA before setting your split.