Rules and compliance
Do S-Corp owners need to run payroll?
Short answer
Yes, S-Corp owners who work in the business must pay themselves a reasonable salary through payroll before taking distributions. The salary carries Social Security and Medicare tax, while distributions do not. Paying too little, or nothing, invites the IRS to reclassify distributions as wages with back taxes and penalties.
Answered by Dushyant Hirwani · Updated November 3, 2026Need help with payroll services?
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