The Rules of Paying Yourself a Bonus, Part 3

What to do if you're an owner of an S corporation

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
1 min read
Opinions expressed by Entrepreneur contributors are their own.

Owners of an S Corporation can take money out of the corporation anytime they wish, without tax impact, by receiving a distribution of profit. If the business is organized as a C Corporation, the owners may also pay themselves dividends; however, these dividend dollars are double taxed--both to the corporation, since they are paid out of after tax dollars, and again to the owners personally as investment income. Additionally, if you work in your business, you can receive dollars from your corporation by paying yourself fair and reasonable wages, taxable to you, for work you performed. And if you have loaned your corporation money, you can receive repayments of any loan you may have made to the corporation, plus interest.

Source: "Taking Profits Legally--and With Minimal Tax Impact"

More from Entrepreneur

Learn how to get your own business launched with our on-demand start-up course. Whether your ready or just thinking about starting your own business, get started for free with our first 3 lessons and receive a personalized 1-page business brief.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur