Reduce Payroll Tax Expenses with an S-Corp

May 17th, 2017 by Doug Boswell

Payroll taxes are a large reoccurring expense for most employers. How can they be reduced? Setting up your company as an S-Corp may be your best solution.

As an S-Corp, the owners can take an additional percentage of their payroll-based income as straight disbursements. These disbursement allow you to avoid the employer side of the federal payroll taxes on the disbursed amounts. Speak with your CPA about determining the maximum percentage amount you can legally take.

Other than that, you are stuck with whatever payroll taxes your employees generate. But remember the total payroll tax expenses include each employee’s tax as well as the employer contributions. That number may look large to you, but realized that these employee tax amounts are not your expense, they are part of the compensation to your employees, who are the ones actually paying it. Only the employer side of taxes are a tax expense to your company.

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1 comment

  1. Thank You for sharing this. It is always valuable to have such detailed explanations.
    Would love to see more of’em coming from you.
    Keep up the good work.!

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