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question about california professional corp

i have a question about a specific tax question regrding california professional corp for a professional services company (law)

setting one up now:

found that i have to use calendar year vs. fiscal year also found that cant use income splitting for professional services which this is.

but, cant find the following; if i elect "s" corp, can i ltake a small sallary, and eave money in the corp, avoiding social security/mediare tax on the unpaid remainder? i know this works for a non professional corp, but not sure if they allow it here for a california (law) professional corp.

thanks for any info on this.

mark

Reply to
Mark G.
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"Mark G." wrote

Yes.......but...........

Both the IRS and the Deaprtment of Labor will frown on your salary being excessively ~low~ and make every atemtp to reclassify any other distributions to yourself as salery, applying the Social Security and Medicare, and state and federal unemployment (if applicable), and any other taxes that are payroll based.

Just a reminder here that Congress (as well as the IRS) is catching on that "S" shareholders are not paying enough in FICA tax by under-reporting their wages -v- profit distributions.

While some amount of profits will be allowed, you need to be wary of excessively low salary from your "S" corp.

Reply to
Paul Thomas

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