Paying Yourself When You Start a Business

http://www.businessweek.com/articles/2012-04-23/paying-yourself-when-you-start-a-business

Another issue to discuss with your accountant, once you hire one, is that as your business grows, your draws will no longer be optional. That’s because the IRS requires business owners to pay themselves a “reasonable” salary, says Steve Sahlein, co-president of the American Institute of Professional Bookkeepers. “The IRS is going to challenge any annual salary that is less than the Social Security wage limit—$110,100 for 2012—to catch those who are trying to avoid paying Social Security taxes,” Sahlein writes in an e-mail.

While most people think of salary and payroll issues as mundane office chores, they are much more complicated than that because they involve tax law, Sahlein notes. Do yourself a favor and get some professional advice so you don’t make decisions that come back to haunt you.