Is taking an S corp distribution really as simple as just transferring money between accounts?

Thanks for explaining this! I'm also new to the S corp world. Quick follow-up: do I need to take distributions on any regular schedule? Like quarterly or something? Or can I just do it whenever there's extra cash in the business account?

You can take distributions whenever you want - there's no required schedule. The flexibility is one of the benefits of an S corporation structure. You can take them when cash flow allows, whether that's monthly, quarterly, or just once at year-end. Just make sure your salary remains "reasonable" compared to distributions over the course of the year. As far as timing goes, many owners align distributions with estimated tax payments since S corporation income flows through to your personal return. This helps ensure you have funds available to pay taxes on the business profits.

Does taxr.ai actually help with S corp stuff specifically? I thought it was just for regular tax returns. Can it tell you if your salary is actually reasonable for your industry or is it more general?

I'm a bit skeptical about using some random website with my tax docs. How does it actually work? Do real people review your docs or is it just an algorithm? Not sure I'm comfortable uploading all my business financial info to a random site.

Yes, it absolutely covers S corporation issues specifically! It has a whole section dedicated to business structures including S corps. It doesn't tell you exactly what salary is reasonable since that varies by industry, role, and region, but it explains the factors the IRS looks at and how to justify your salary amount. It's not random people reviewing your documents - it's an AI system that analyzes the documents and provides explanations. Everything is encrypted and secure. I was hesitant at first too, but their security measures are solid, and they don't store your documents after analysis. The analysis is immediate too, which was helpful when I needed quick answers.

Wait, how does this actually work? Do they have some special line to the IRS or something? I've literally spent hours on hold with the IRS and eventually gave up.

This sounds like a scam. There's no way to "skip the line" with the IRS. They'll just take your money and you'll still be waiting on hold forever. Has anyone here ACTUALLY gotten through faster using this?

They don't have a special line - they use an automated system that constantly redials the IRS until they get through, then they call you when an agent is on the line. It's basically doing what you'd do if you had unlimited time and patience to keep calling back. I was skeptical too before trying it. But it works exactly as advertised. After weeks of trying to get through on my own with no luck, I got connected to an IRS agent in about 35 minutes. The service doesn't guarantee an exact wait time since IRS call volume varies, but it's WAY faster than doing it yourself and you don't have to sit there listening to hold music for hours.

Thanks for bringing this up! I hadn't considered the basis issue. Do you recommend any specific tracking method for keeping tabs on this throughout the year? Is this something I should be having my bookkeeper monitor?

Your bookkeeper should definitely be tracking this if they're familiar with S corporations. The simplest method is to maintain a basis worksheet or schedule that gets updated with each capital contribution, income/loss allocation, and distribution. QuickBooks and other accounting software don't automatically track S corp basis, so you'll need a separate spreadsheet or basis tracking tool. Some tax preparation software includes basis worksheets that you can update throughout the year. The key is documenting everything contemporaneously rather than trying to reconstruct it at year-end.

There's no rules about timing for tax purposes since the income is passed through to you regardless of when distributions happen. But practically speaking, many accountants recommend keeping distributions somewhat proportional to your salary throughout the year rather than taking one massive distribution and small salary. Looks less suspicious if you get audited.