The main takeaway here is that the IRS is starting to look at S-Corps more and more for compliance. S-Corps have exploded in the last ten years or so as the “gig” economy has taken off. And while nearly all of my clients would not have an issue with the technical things they are targeting – it is important to know that more scrutiny could be coming. It will be important to make sure that you are doing things properly and documenting them:
- Split your business and personal accounts. Don’t pay business expenses from a personal account and vice versa
- Make sure you have payroll running for compensation
- Make sure to direct all your income into your S-Corp
- Be purposeful in withdrawals and contributions. You can move money into and out of the corporate accounts, but be systematic about it.