Business has not filed in three years and the owners have simply taken dividend distributions. Would I be right in saying that they have to go back and do payroll and that it does not matter whether they are organized as a partnership or a corp? Business consists of a franchise store with no employees other than the two owners.
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I think the entitity type matters - maybe a lot.
What type of entity is it?
LLC, corp, partnership, other?"The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
Of course the entity type matters
Partners working for the business do not, can not , be on payroll. If they are active in the business it is self employed income.
S-corp owners working in the business SHOULD be on payroll. But, truth be known, a great many do not take payroll. If the business is low profit yet they probably would not get into much trouble even if they ever get checked.
What is their actual entity type? then we could be more specific.AJ, EAComment
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AJ,
"Truth be known", all of my s-corp S/H's receive payroll checks. It used to not be this way, but as this payroll thing became an issue, my s-corp clients were educated and were born again S/h's who now are on the payroll of their corps. Also true is that if the corp has no net profits for the year, it is very likely that the S/H's will not receive a paycheck.Dave, EAComment
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Entity type unknown
I will post more when I find out late this upcoming week or early the following week.Comment
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