I will be starting a new entity as a libility shelter that will hold vehicles and employee's. Our current entity will subcontract the work to this new entity and the new entity will be just barely enough to cover its costs.

Regarding the vehicles it is most advantageous to take the standard mileage deduction. Because the actual vehicle expenses are less then the deduction we will accrue untaxed cash in the new entity. For this reason I am planning make the new entity an S-corp, so that we can withdraw that accrued cash tax free since we are only taxed on what is reported on our k-1 (I may be wrong in this thinking).

Since the S-corp will only make enough to cover its expense it will never be able to pay its shareholders a salary. Is it ok for an s-corp to never pay a salary? My research indicates that is ok, based on IRS FS-2008-25 and the line "The amount of the compensation will never exceed the amount received by the shareholder either directly or indirectly."