How to Hire Yourself as an Employee of Your S Corporation in California

Hello, I'm Attorney Elizabeth Potts Weinstein. Today, we're discussing how to hire yourself as an employee of your S Corporation in California. This guide is specifically for business owners in California who have formed an LLC or a corporation that is taxed as an S corporation. Why You Need to Hire Yourself If you have an S Corporation, you cannot pay yourself solely through profit distributions. The IRS requires you to hire yourself as an employee and pay yourself a reasonable salary. This ensures that you comply with tax regulations, including Social Security and Medicare taxes. Steps to Hire Yourself as an Employee 1. Form Your S Corporation First, you need to have an S Corporation. This can be an LLC or a corporation that you elect to have taxed as an S corporation. You cannot elect S Corporation status for a sole proprietorship. 2. Obtain an EIN Ensure you have an Employer Identification Number (EIN) from the IRS. This is required to file the S Corporation ele...