[topgrain2]

> Incidentally, corporate taxes are why many small business owners pay themselves wage income, rather than doing stock buybacks or dividends.

You've been sold some BS. Usually this is because you're required to take a "reasonable" wage for your role in a company. Otherwise I guarantee you every independent contractor out there (among others) would be operating in a way that made 100% of their income business profit, rather than wages, as it has enormous tax advantages. Approximately everybody tries to find out the least they can take as wage income without pissing off the IRS, and sets their "wage" to whatever that is.

[nickff]

Many locales have laws that do not allow remuneration above the 'reasonable wage', to prevent tax circumvention by having employers spread wage payments across multiple family members of employees, but I am not familiar with any jurisdiction with a minimum reasonable wage law or regulation. Could you please link some source for the claim that business owners are required to accept a 'reasonable wage'?

[topgrain2]

https://www.irs.gov/businesses/small-businesses-self-employe...

[nickff]

Yes, that is intended to disallow officers from avoiding taxes by being compensated via ‘loans’ and other means. I can’t find any case where dividends or buybacks were found to be violations of that rule. https://cpataxteam.com/blog/s-corp-owners-are-you-paying-you...

Do the math for yourself. Paying corporate taxes on profits, then dividend taxes on what gets paid out is not a savings versus paying income+payroll tax (which comes from money that is treated as an expense at the corporate level).

[topgrain2]

There are more taxes than federal income and corporate taxes. State taxes and especially the ~15% of wages that go to FICA also matter (the topic was small businesses, so presumably the owner's not making so much more than the FICA limit that this becomes negligible).