As sole shareholder for a single person corporation (have not created it yet), am I forced to pay myself a salary?
Currently in business as sole proprietor but not enough revenue to pay myself anything and I'm still giving my own money to the business to pay for some business needs (business records show them as investments and they will stop when business can pay its own bills without my help). I really want to change to corporation before I hire people but don't want to do that if that means all money the business makes I have to give to myself for reasonable compensation.
Put simply, can I create the corporation and continue growing the business by doing work for the business and not paying myself anything? Once the business is able to afford to pay a reasonable salary I will do so.Great answers everyone, thanks. Here's the reason I'm considering this option: I've read that taxes are better for the business (less to pay) with the business entity as a corporation instead of a sole proprietorship. I want the right business entity in place before I begin hiring staff. The main issue for me as the owner is the business is still in start up phase and cannot afford to pay me any salary at this time so I'm caught between getting the entity I'd like and lack of restrictions as a sole proprietor because as a sole proprietor, I can choose not to pay myself anything.