Q: If my business' cofounder and I elect to stop receiving compensation for months, must I file state payroll reports?
The two of us are currently the only employees of our business, and only took a single paycheck of $100 each to set up the payroll system so it would be in place when we have employees in the future. We have since decided to delay any hiring, and will not be taking any compensation ourselves, for several months so I am attempting to avoid paying for an unnecessary payroll service (which currently generates our state-required reports).
A:
This is a question best answered by your tax accountant. While owners can agree to not take a salary from the business there are tax consequences associated with that decision that you need to measure against the relatively small administrative charges you wish to avoid paying. Get in contact with a qualified tax advisor before making these kinds of decisions.
Good luck to you.
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