| “Since I am required to pay myself a salary, what is the best approach to take regarding quarterly employee taxes and reporting?”----> You don't have to file quarterly 941 until you start paying wages, either to youself or someone else.Once you do start taking a salary you will need to file form 941/940 ; you will need to pay both halves of the FICA Taxes. Your Sc orp deduct ER’s portion on 1120s Line 12. (ALSO, as long as you get paid wages, you need to file form W-2 reports wage paid and withholdings on a per employee basis. It is accompanied by form W-3.).However, Courts have consistently held that S corporation officer/shareholders who provide more than minor services to their corporation and receive or are entitled to receive payment are employees whose compensation is subject to federal employment taxes. As an owner-EE of the S-Corp, you will have to pay yourself a salary, and pay payroll taxes on your salary, even if the S-Corp loses money; paying zero wages to an owner-employee is unreasonable. Even if an S corporation loses money in its first year of operation, there may still be taxes due. Payroll and excise taxes are paid regardless of whether an S corporation makes a profit or loses money. Losses will reduce a shareholders' taxable income.The real difficulty comes when a company is just starting out, such as your wife's business like yourself. And so it strikes many people as silly that they take their own money out of their savings account, put it into their own business, and then pay themselves a salary, plus all those taxes, with their own money. Many people often discourage entrepreneurs from using S-Corporations until the business clearly has enough cash-flow to pay reasonable salaries to the owners.
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