No. of Recommendations: 7
But what about paying myself a bonus?

What about it?
You'll then have to pay taxes on it.


Correct. But according to IRC #74 I can pay myself an Achievement and Longevity award of $1,600 each year. If I pay cash I have to pay taxes, but if I buy something and award it as a gift to myself for this reason then I get it with no taxes.

IRC#79 says you can receive up to $50K from the company in paid for life insurance.

IRC#105 and 106 discusses medical plans and options regarding a corporation.

IRC#129 says a corporation can provide it's employees up to $5000 year in dependent care expenses tax free (child care costs). All employees have to be eligible, but if you are the only employee...

IRC#132 says the company can pay for fitness equipment and expenses if the BOD says that it's a perk for the employees.

IRC#243 discusses how your company is treated for capital gains and dividends. Depending on how much of that other company is owned by the corporation up to 100% of the dividends are tax exempt, but at a minimum 79% are tax exempt. This could be significant tax savings.

Other codes discuss company sponsored pension plans and automobile reimursement for exectuives. Other codes also state that the company can pay for all meals that are provided on company premises, and if you run your business from your home wouldn't that be the company premises? All this is predicated on setting everything up correctly.

If that is all, then it seems to me that it is just deferring taxes until a latter point, but paying some taxes upfront for that privilege, and more taxes overall, as eventually you want to use the money for something...

I agree, but compounding this money pre-tax should eventually lead to larger amounts of money for me to use. The longer I can defer the taxes the more I have to compound, and thus the more I will eventually have. This is the basis behind "buy and hold" with stocks.

Of course I advocate discussing this with an Attorney or CPA. I am not considering this without the input from those two parts of my business team.

If you are interested I would recommend reading the book "Inc and Grow Rich" by CW Allen and others. This is where I got most of this information and I'm verifying this with my CPA and Attorney as we speak.

Fool on!!
Matt
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