I recently met with a payroll processing sales person. She inquired as to how many zero balance S-Corps, did I process at the end of the year.
I informed her that I did not do any. First there are a number of client whom handle their own payroll and I would not be involve unless they requested this service. Two, I do not like it as a tax strategy.
Being an S-Corp as apposed to an LLC allows you to some profit not subject to FICA taxes only ordinary income. Why give up that benefit and zero out the profit and take it as payroll income.
If you plan on deferring it into a SEP, SIMPLE, 401K or just an IRA; this can also be done without the zeroing out of the income. Some additional planning may be necessary, but it can be easily done.
To discuss this and other tax strategies give us a call.