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Greed <i>Isn't</i> Good

Be careful when deciding what to pay yourself, because Uncle Sam's watching.

By Joan Szabo

Opinions expressed by Entrepreneur contributors are their own.

When the profits are flowing in, it's often tempting to giveyourself a nice, big bonus at the end of the quarter. But you'dbetter keep your greed at bay if you're organized as a regularcorporation: The IRS is going after those business owners who paythemselves too much.

A number of entrepreneurs have ended up in court on the issue,and the IRS has come away with some impressive wins. It hassuccessfully argued that a portion of the compensation taken,including bonuses, should have been declared corporate dividends.When dividends are declared, the owner is taxed twice on theincome, once at the corporate level and again when the ownerreceives the money.

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