#16 - Owner Compensation Tax & Accounting

Empowering Healthy Business: The Podcast for Small Business Owners

Healthy businesses produce healthy income for their owners. Compensation for business owners can take different forms. This episode discusses the primary forms of owner compensation and associated tax considerations. We also review bookkeeping and reporting considerations for how owner compensation is booked and reported on financial statements.
More specifically, this episode includes:

• The primary forms of owner compensation and how they are taxed both on the business and on its owner-employees
• How entity type and tax elections impact the taxability of owner compensation
• S-corporations and reasonable compensation standards
• How accounting for owner compensation can have a dramatic impact on financial statements and evaluating business profitability
• Pitfalls to avoid with owner compensation
• The importance of your CPA utilizing a holistic tax plan to help optimize your tax liabilities

Connect with guest Greg Reed at:
www.smartbookstax.com
[e-mail]

Sponsored by SmartBooks. To schedule a free consultation, visit smartbooks.com.

Thanks for listening!
Host Cal Wilder can be reached at:
[e-mail]
https://www.linkedin.com/in/calvinwilder/

Chapters

1. Forms of Owner Compensation and How They Are Taxed (00:02:27)

2. W-2 Wages (00:03:20)

3. Owner Distributions (00:06:12)

4. Discretionary Expenses & Fringe Benefits (00:10:23)

5. Reasonable W-2 Compensation for Owners of S-Corporations and Mitigating Self Employment Tax (00:14:05)

6. Accounting for LLC Owner Compensation in Financial Statements and Accurately Reporting Business Profitability (00:25:22)

7. Retaining Cash to Pay Taxes (00:32:44)