A few years ago I had a client come to me and state that they were thinking of retiring in the not too distant future. They had worked for their own business and did not have enough fiscal quarters in to be eligible for Social Security.
At this point I suggested a very modest salary a year, it would not strain the small company and the company would still show a modest profit. I was told they wanted to triple my salary amount. They wanted to have as much Social Security as they could get. I disagreed, but we followed the client’s instructions.
Some time later we find that the client was not making the required tax payment or keeping current. A payment plan ensued and the salary is dropped while they attempt to get even with the government.
Then the health issues occurred. The client has suffered a major stroke. They are still short quarters and not eligible for Social Security. They also still have the outstanding tax liability for not making the timely tax payments.
What savings they had seems to have been depleted. They are a current non-filer since we never received the documents for their 2013 tax preparation. They are currently thinking of declaring bankruptcy, and it is unlikely that they will be able to work again.
It is not always possible to follow the plans that we set into place. There will always be unforeseen events, but we all have to do what we can to ensure that we try to learn to do better from our own mistakes by I also believe that we can learn from the unfortunate misfortunes of others.
I think there is a very important lesson to learn for small business owners. Pay yourselves first and keep current on payroll taxes; even if the amount is modest.