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Q: Should I make my wife a director for my S-Corp? ( Answered,   0 Comments )
Subject: Should I make my wife a director for my S-Corp?
Category: Business and Money > Small Businesses
Asked by: dhecker-ga
List Price: $10.00
Posted: 04 Sep 2006 09:45 PDT
Expires: 04 Oct 2006 09:45 PDT
Question ID: 762107
BACKGROUND: I am the sole owner of an s-Corporation (California). My wife is
making substantial and ongoing contributions to the operation of the
business (performing administrative tasks, helping to manage vendors,
etc.). I am trying to determine if I should make my wife a director of
the corporation, and if I should compensate her for her work.


1) I want to be able to deduct expenses that she incurs such as laptop
computers (for business use, etc.). She occasionally joins me on
business trips and helps arrange vendor meetings, etc. I am assuming
that these expenses would be more legitimate is she was a director of
the company.

2) I want to ensure that my wife maintains control of the corp in the
event of my death. I would also like her to be able to sign documents
and perform transactions on behalf of the corp, for operations

3) At this time, I have myself on payroll and with my salary and 401k
contributions (paid by the corp) I am not leaving much money in the
corp (as retained earnings). Since we file jointly I'm not sure that
there would be any benefit to putting my wife on payroll, and there
isn't a lot of extra money to distribute from the corp at the end of
each year.

QUESTION: Given the above circumstance, could I achieve the above goal by
creating and signing meeting minutes which woud make my wife a
director but not actually compensate her?

Clarification of Question by dhecker-ga on 04 Sep 2006 09:50 PDT
Additional Note: I am also the sole stockholder in the corp.
Subject: Re: Should I make my wife a director for my S-Corp?
Answered By: taxmama-ga on 13 Sep 2006 16:59 PDT
Dear dhecker-ga, 

Your wife is doing substantial work for your business. 

Cut your salary a bit and pay it to your wife, so she builds her own
Social Security account.

Cut your 401(k) contributions a bit so she can contribute to her own account. 
(Note: As those balances build, if you ever need the money, you'll be able 
to borrow 2 x $50,000 - not just $50,000 on your account.)

Make her an officer of the corporation - Treas or Sec. 

Enter the decisions in the minutes.

This should give you what you're trying to accomplish - and set her up, 
in her own right, too. 

Best wishes, 

Your TaxMama-ga
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