[Carl]

What’s the comp at now that he or she wants to double for your W2?
What’s your K1 at with your current salary

[Tristan]

The CC points are super relevant
Obviously if your accountant knows what they are doing, follow what they say….

Then at that point, you have to decide what your future is going to be.

Are you in your highest income need years now?

or in retirement will you be needing more money pulled to live off of?

You want to calculate what makes the most sense from a tax perspective (this is where I nerd out and clients eyes gloss over because I’m a wealth advisor who works with business owners with a focus in tax strategies).

Oftentimes people put too much money in tax deferred options and have a big tax issue later when they have to take it out.

So, it’s about finding the right balance, knowing if/when is the best years to convert to roth options, etc.

There is another strategy you may consider, but I refuse to put it on a public forum as it’s absolutely not appropriate for most people and is very commonly false advertised as everyone should do it, but if you want to know feel free to message me and we can discuss behind the scenes

[Mary]

I heard the IRS wants to see a reasonable amount paid as your W2 salary compared to distributions (you’re aware Dist are not subject to SS/Medicare right?).

If your S-corp net is $180-200k and your paying yourself $30k W2, that’s too low and will catch the attention of the IRS.

If it would take $60k to pay someone to do your job, that is what you should pay yourself (as W2) and the rest as distributions, and is less likely to be deemed by the IRS as unreasonable.

Maybe have a call with your CPA who can explain it best?

[Shawn]

The W2 is low IF you are taking the rest as a distribution. You are not required to take a distribution.

The most the IRS can ever deem a reasonable salary is the amount you actually took out.

How much were you distributing outside your salary?

[Araa]

My Fidelity card had no expiration for points for years. Suddenly I noticed losing 25% points, policy had changed sometime…I didn’t notice.

[Jen]

First, pay off your credit cards. No reason to carry debt. 2nd, max out your owner 401k, as an employee and as an employer with a match.

This reduces your taxable income and sets your future retirement up to be great.

[DeShea]

Me personally. I run every transaction through the business. Max 401k on both sides.

You should have a lost for long as possible

[Josh]

Not a cpa.
However, I’d pay off the cards. Keep using your business loans and payt him off though.

Not sure of 401k etc.

I think you will make much more paying “yourself” your business.

Ie buy things to grow your business.

Find real estate to buy. Use an SBA loan.

Can lease 51% to your business and 49% to another business and that business can most likely pay the entire mortgage.

2nd. Hire someone.

Whatever you hate or suck at in your business. Hire someone for that position.

You’ll be amazed how that will help you grow your business.

Do a free disc profile (most good entrepreneurs are adhd).

Generally finding someone organized helps.

I did exactly that and my lifestyle increased tenfold (much less stress).

And allowed me more creative time to focus on true growth both business and personal.

401k is a good safety net.

But you are basically bankrolling wall street.

If you’re that successful. Bankroll yourself.

Get a life coach (expenses thru business).

Etc

That’s where I would focus your $$$ into.

[Author]

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