Expert: Ed McFarland - 11/2/2007

Question
Hi, I work for a small company. Just my boss and myself.  This company is a
C-Corp.  I handle payroll. I know the taxes to pay, when and where.  What I
don't know is how should the owner/president of the company be paid?  The
company has had a net operating loss since in business (2002) but soon to
turn around.  We need to show him as being a paid employee in order for us
to obtain health insurance for the company (2 employee minimum). Any
guidance would be greatly appreciated. Thanks, Jamie

Answer
Sure he can be paid and should be. Many small business people confuse profits with their paycheck.

He should be a regular W2 employee.

The profits should be treated as retained earnings and be included in the equity, which will negative for the time being.

Good luck