When should you pay yourself? Paying yourself on the wrong payroll schedule can create IRS red flags, cash flow crunches, and painful cleanup later.

In this episode, we break down monthly, quarterly, and annual payroll for S Corp owners. You’ll learn what the IRS actually expects, how reasonable salary works, why quarterly “true-ups” can create cash flow problems, and how to structure payroll to stay compliant without overpaying in taxes.

We also cover catch-ups, slowdowns, bonuses, zero payroll returns, and a critical but often-missed strategy involving self-employed health insurance and HSA contributions that can reduce FICA taxes.

If you’re an S Corp owner trying to pay yourself the right way and avoid IRS attention, this episode walks you through exactly how to do it.

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Chapters

(01:00) The Reasonable Salary Requirement for S Corps
Why S Corp owners must take W-2 payroll and why determining reasonable salary is the first step.

(03:10) Payroll Software and Filing Requirements
Why using payroll software matters and how missed filings create serious problems.

(04:00) Monthly and Biweekly Payroll Explained
How spreading your salary evenly works and why this is the most common recommendation.

(05:30) True-Up Payroll. Quarterly and Annual Options & Cash Flow Risks
How quarterly and annual true-ups work and how draws get reclassified as wages. Large quarterly tax payments can create cash crunches.

(08:45) Zero Payroll Returns and Compliance Traps
Why you still need to file payroll returns even when no payroll is run.

(09:30) Catch-Ups, Slowdowns, and Bonus Payrolls
How to adjust payroll when income, workload, or profitability changes.

(11:45) Self-Employed Health Insurance and HSA Adjustments
How S Corp owners can increase reasonable salary without paying extra FICA taxes.

(15:30) The Safest Payroll Strategy for Most Owners
Why consistent payroll timing protects cash flow and reduces IRS risk.

Podcast Host:

Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings Podcast
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🎙 ABOUT THE PODCAST
The Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks down complex tax topics into clear, no-fluff insights so you can keep more of your hard-earned money.