Paying a Salary to a Shareholder/Director that does nothing?
Hey there,
So my wife, my best friend and his wife started a business. My best friend and I will be active in the business and our wives are just equal Shareholders/Directors. They both have low salaries, are we able to just pay them whatever salary we want and not take salaries ourselves. Even though we are involved in the day to day and they are just passive investors? We are selling 100% products and have no retained earnings so we want to just pay a salary. I would think this is fine because considering they own half the company, they can pay themselves a salary for twiddling their thumbs if they want.
Is that correct?
So my wife, my best friend and his wife started a business. My best friend and I will be active in the business and our wives are just equal Shareholders/Directors. They both have low salaries, are we able to just pay them whatever salary we want and not take salaries ourselves. Even though we are involved in the day to day and they are just passive investors? We are selling 100% products and have no retained earnings so we want to just pay a salary. I would think this is fine because considering they own half the company, they can pay themselves a salary for twiddling their thumbs if they want.
Is that correct?