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Updated almost 9 years ago,
commission vs salary
hello to everyone out there. This is my first time asking a question.
I have a C-Corp with an asset management company under it which owns a portion of my individual LLC. Currently we are not making money in the business and in our corporate book/minutes we have stated that we will not take a salary for five years.
my question is we are in the middle of a flip and I wanted to know if I can pay the three owner/members a % of the sale as a commission based on a 5%-20% rate depending on the profit from the sale even if we are not receiving a salary currently.
if we can do this how do I account for the commission paid to each and what form do I need to fill out at the end of the year for each of us to report the income on our individual taxes?
I do know that I need to fill out a 1099-MISC form for our friend (who is doing a lot of work for me) who will receive a commission of the sale as an independent contractor.
Any advice or suggestions would be greatly appreciated. My CPA was not very informative on the question.
Thank you
Nancy Smith