did not take income in first year
I have a 2 person S-corp (50/50). We started the Co. at the end of 2011 but didn't start making product or sales until about half way through 2012. We put my partner on payroll in July 2012 but I did not show any p/r for myself that year. It was a real struggle to make any payroll at all, even the regular emplyees went without pay some weeks. (they are family members & freinds)
I realize I need to show some payroll for myself as I did receive loan repayment of app. $5,900 for the year. My loans to company were $34,000, mostly in the form of business expenses on my personal credit card.
My question is: Since I have not filed for 2012 yet, can I re class some of the loan payable-shareholder to "employee paid expenses" because that's what most of it really is.
Also, could I do a 1099 to myself for 2012 retroactive and show the income on my personal return, to save the company from excessive penalties and interest? (I'm expecting a large loss personally)
I'm thinking of calling the IRS to see if they would lower the normal requirements for shareholder salaries in view of the low overall payroll.
I did put myself on payroll in 2013, but very low, and not cashing all of the checks.
Any ideas are greatly appreciated. Thanks in advance.