Does a C-corp have to pay salary to the sole owner who works full-time?
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Does a C-corp have to pay salary to the sole owner who works full-time?
A person is the only owner, director, and officer of a startup C-corp. He is working full-time on the business and the profits are growing. The owner doesn’t want to take any money out of the company at the startup stage. Is it legal for the C-corp to retain all profits and not pay any salary or dividend to the owner for a few years?In otherwords, is a sole owner of a startup subject to minimum wage? requirements?
Asked on May 21, 2013 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 10 years ago | Contributor
No, an owner of a company is not subject to minimum wage requirements so long as he is not treated as an employee of the company (i.e. there should be no withholding; no health insurance through the company; etc.). Corporations do not have to employ anyone (even people who do work do not necessarily have to be considered or treated as employees), and only employees are subject to minimum wage.
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