12 Do’s and Don’ts for a Successful S-Corporation

Do’s for your S-Corporation 

1. Be sure to file the Form 2553 and that it gets accepted by the IRS 
2. Pay yourself a reasonable compensation for services you are performing to your S-Corporation
3. Track all shareholder loans and/or advances you make to your S-Corporation
4. Keep good accounting records that track all aspects of your financial data (i.e. income, expenses, shareholder loans, shareholder distributions, etc.)
5. Take distributions within the amount of your basis to avoid capital gains tax
6. Talk with your tax advisor before repaying a shareholder loan 

Don’ts for your S-Corporation

1. Add ineligible shareholders to the S-Corporation  
2. Perform actions that can result in an inadvertent termination of your S-Corporation
3. Take all distributions from your S-Corporation to avoid payroll costs
4. Make disproportionate distributions to shareholders
5. Forget to take steps necessary to show shareholder loans are bona fide loans made to the S-Corporation
6. Pay yourself a super low salary if you want to benefit from retirement planning benefits that are based on the amount of your salary