S corporation: distribution vs. salary
My husband & I own & operate a small S-corp in NJ. Our accountant cautioned us against taking distributions, indicating we should take $ from the company in the form of salary only. Considering the high amount of $ we pay for payroll taxes and that our salaries greatly increase the cost for our insurance (workmen's comp etc. insurance based on audits of our payroll records) we cannot figure out why she told us to take salary over distributions. The company is not making large profits each year where we'd need the tax break. Your help will be much appreciated!