Single owner S Corp paid the owner a salary on a W-2 in 2011 which was the first year of operations. A paid book keeper under the supervision of the treasurer who received neither pay nor ownership prepared the financial statements, the payroll and the sales tax reports. Everything appears to me to be in order. Now for questions.
The owner did not cash but about half her paychecks because the business didn't have the funds to cover the other half. Her W-2 reports her full pay and the uncashed checks are reported as contributions of capital by her. The client wants to know whether that is the correct treatment or does the payroll need to be amended, and I am asking this group.
The unpaid treasurer contributed money to the business. She does one day intend to be an owner of the business. I don't understand why she is not already. Can we all stay out of trouble if I simply record the treasurer's contributions as loans with simple interest? What's the lowest interest we can all get by with. Is it possible to have an owner who is for now not entitled to anything from the business, especially if as appears to be the case there is not profit to distribute?
The owner did not cash but about half her paychecks because the business didn't have the funds to cover the other half. Her W-2 reports her full pay and the uncashed checks are reported as contributions of capital by her. The client wants to know whether that is the correct treatment or does the payroll need to be amended, and I am asking this group.
The unpaid treasurer contributed money to the business. She does one day intend to be an owner of the business. I don't understand why she is not already. Can we all stay out of trouble if I simply record the treasurer's contributions as loans with simple interest? What's the lowest interest we can all get by with. Is it possible to have an owner who is for now not entitled to anything from the business, especially if as appears to be the case there is not profit to distribute?
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