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S Corp owner's W2 and other questions

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    S Corp owner's W2 and other questions

    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?

    #2
    Originally posted by erchess View Post
    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?
    All should be Loans to Corporation. Officer = Loans from officer.... Bookkeeper= Loan from 3rd party...........
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

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      #3
      Thank you Bob

      I believe loans require interest and so I wonder what is the lowest rate we can get by with.

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        #4
        I have used recently 4% ( as my guess) without looking it up. Years ago it was 8%+..

        Added>>> Interest would not have to be paid for officer loans under $10,000...
        This post is for discussion purposes only and should be verified with other sources before actual use.

        Many times I post additional info on the post, Click on "message board" for updated content.

        Comment


          #5
          TY Bob

          Thank you so much.

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