If you're like most small business owners, your spouse does odds and ends around the office and pitches in when you need help. This is particularly true in the summer months when other employees take vacation leave.
Strategy: Make your spouse an official employee. Pay him or her a regular salary, withhold income tax and employment taxes, deduct contributory employee expenses—the works. While it will add a few extra paperwork hassles, you should come out way ahead tax-wise.
Want specifics? Here are six good tax reasons why you should put your spouse on the payroll today:
1. Income shifting. If you're operating as a C corporation, any compensation paid to your spouse would normally be left in the corporation. As a result, if your corporation is in a higher tax bracket than your personal tax bracket, you save tax overall by paying your spouse a salary. Otherwise, there's no real tax benefit—and possibly a drawbac...(register to read more)