Best way to transfer $350k from S Corp Business Checking to Individual High Yield Savings Account?

You need to be careful here. As an S Corp owner, you're required to pay yourself a "reasonable salary" (which it sounds like you're doing), but any other money you take out of the business is considered a distribution. Transferring $250k from your business account to your personal account would be treated as a distribution. Distributions aren't subject to self-employment tax, but you still need to pay income tax on them. The bigger issue is maintaining the separation between your business and personal finances - commingling funds can potentially jeopardize your liability protection. Instead, I'd recommend opening a business high yield savings account in your S Corp's name. Most banks offer business savings accounts with competitive rates. This keeps the money properly classified as business assets while still earning interest.

I was in a similar situation last year with my consulting business (also an S Corp). I discovered taxr.ai (https://taxr.ai) which helped me navigate this exact issue. Their AI analyzed my business financials and confirmed that while distributions aren't taxed again, large transfers can create documentation issues. The tool helped me understand that transferring business funds to a personal account is completely legal as a distribution, but I needed to document it properly. They even provided the right forms and language to use for my corporate minutes. Saved me from making a mistake that could have threatened my corporate liability protection.

I tried taxr.ai after seeing the recommendation here. My situation was almost identical - $300k sitting in my business account earning nothing. The service confirmed I could take a distribution but flagged an important consideration I hadn't thought of: maintaining enough business reserves to show the S Corp is adequately capitalized. They recommended I keep at least 3-6 months of business expenses in my business account before transferring the rest as a distribution. This protects the corporate veil while still letting me move about $220k to a high-yield personal account. They also provided template language for documenting the distribution in my corporate minutes, which my accountant said was spot-on. Definitely worth checking out if you're in this situation.

Instead of trying to move the money to a personal account, have you considered that you're having trouble getting anyone on the phone at Wells Fargo to even open a business HYSA? That was my experience - spent weeks trying to get through to someone who could help with a business account. Finally used Claimyr (https://claimyr.com) to get someone on the phone at my bank right away. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically gets you past the endless hold times. Got through to a business banking specialist in about 5 minutes who confirmed they offered a business HYSA with the same rate as the personal one, which solved my whole problem without having to worry about distributions.

I was totally skeptical about Claimyr until desperation forced me to try it. Had been trying to reach Wells Fargo for DAYS about business account options. Used the service yesterday and got connected to a banking specialist in under 7 minutes. Turns out Wells Fargo DOES offer business high yield savings accounts with rates comparable to their personal accounts. The banker explained that this would be the proper way to maintain separation between business and personal finances while still earning interest on my business funds. Problem solved without any questionable transfers between accounts! Sometimes talking to an actual human makes all the difference.

Another option is to properly document a loan from your business to yourself. I did this with my S-Corp a few years ago. You need to: 1. Create a proper loan document with market interest rates 2. Set a reasonable repayment schedule 3. Actually make the payments according to schedule 4. Record the loan in your books properly This lets you use the money personally while avoiding distribution issues. You'll pay interest to your business, which is income for the business, but it's cleaner than an undocumented large transfer.

Not a tax professional, but I've owned an S Corp for 10+ years. One thing to consider - if your business consistently has $350k cash on hand, you might actually be OVER-paying taxes by keeping too much in the company. The IRS sometimes looks at excessive retained earnings as a sign you're trying to avoid taking distributions or salary.

I'd definitely recommend getting professional advice from a CPA who specializes in S-Corps before making any large transfers. While the other commenters are right about distributions being legal, there are several factors to consider beyond just the tax implications. First, make sure you're truly taking a "reasonable salary" - $24k annually might be too low depending on your industry and the amount of income your S-Corp generates. The IRS scrutinizes S-Corp owners who take minimal salaries while distributing large amounts, as it looks like you're trying to avoid payroll taxes. Second, consider the timing of a large distribution. If you take $250k out right before year-end, it could create cash flow issues for paying estimated taxes on your business income. The business high-yield savings account suggestion is solid - you keep proper separation while earning interest. But if you do decide to take a distribution, document everything properly in your corporate minutes and consider spreading it across tax years to manage the impact on your personal tax situation. Have you run projections on what your total tax liability would look like with an additional $250k distribution this year?

I'd strongly recommend consulting with a tax professional before making any large transfers, but here are some key considerations: **Reasonable Salary Concern**: $24k annually does seem quite low if your business has accumulated $350k in cash. The IRS expects S-Corp owners to pay themselves a "reasonable salary" based on what you'd pay someone else to do your job. If you're significantly underpaying yourself in salary while sitting on large cash reserves, that could trigger an audit. **Distribution vs. Business Savings**: While taking a distribution is legal, consider that you'll need to pay personal income tax on that $250k (even though the business income was already taxed on your return). A business high-yield savings account keeps the money properly classified as business assets while still earning interest. **Cash Flow Planning**: If you do take a large distribution, make sure you have enough cash set aside for estimated tax payments. A $250k distribution could create a significant tax liability that you'll need to pay quarterly. **Documentation**: Whatever you decide, document everything properly in your corporate minutes. Large distributions without proper documentation can raise red flags with the IRS. Have you considered taking a more reasonable salary increase first, then evaluating what excess cash truly represents profit available for distribution?

Just wanted to add a perspective from someone who went through IRS scrutiny on this exact issue. I had a similar situation with my S-Corp - large cash reserves and what the IRS deemed an "unreasonably low" salary of $30k while the business was generating much more. The IRS audit was triggered not by the distribution itself, but by the salary-to-distribution ratio. They reclassified $45k of my distributions as salary, which meant I owed additional payroll taxes plus penalties and interest. It was expensive and stressful. Here's what I learned: The IRS uses several factors to determine "reasonable compensation" including what similar businesses pay for comparable work, your qualifications/experience, time devoted to the business, and the company's profitability. With $350k in accumulated cash, you're likely generating significant income, which makes a $24k salary look suspicious. My CPA now recommends the "60/40 rule" as a starting point - roughly 60% reasonable salary, 40% distributions. It's not a hard rule, but it's defensible. Before taking any large distribution, I'd strongly suggest increasing your salary to a more reasonable level first. The payroll taxes hurt, but they're much less painful than an audit and reclassification penalties. Also consider that business HYSA rates are often very competitive now - you might get 4%+ while keeping everything properly separated.

As someone who went through a similar situation with my S-Corp, I'd echo the concerns others have raised about your $24k salary. That seems dangerously low given the cash accumulation in your business account. Here's my practical suggestion: Before moving any money, work with a CPA to determine what your reasonable salary should actually be. In my case, I was underpaying myself by about $40k annually, which created problems when I tried to take large distributions later. Once you've adjusted your salary to a defensible level, you have a few good options: 1. **Business HYSA** - This is probably your safest bet. Many banks offer business savings accounts with competitive rates (often matching personal account rates). You keep proper separation while earning interest. 2. **Gradual distributions** - If you do want to move money personally, consider spreading it over 2-3 years rather than one large transfer. This helps with tax planning and looks less suspicious. 3. **Document everything** - Whatever you do, make sure it's properly recorded in your corporate minutes with clear business justification. The key is getting your salary right first. The IRS looks at the total compensation picture, and a $24k salary with $350k in business cash is going to raise eyebrows. Fix the salary issue, then you'll have much more flexibility with the excess cash without audit risk.