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Boise Idaho Business Guide: High-Earners

Yes. Idaho C-Corporations are not required to pay a reasonable wage. However, it is a good rule of thumb to pay working owners/shareholders even a small wage. Salaries paid to an owner of an Idaho C-Corporation is treated as any other employee wage and is deductible.

In addition, Idaho C-Corporations are allowed to offer their employees (you) a plethora of fringe benefits. These benefits are considered business expenses and not taxable income. As long as the plan is nondiscriminatory, the reimbursements are not taxable to the employees. When ready to form these types of fringe benefits, a nondiscriminatory plan will be spelled out in the Bylaws.

Common types of fringe benefits:

  • Health insurance premiums
  • Long-term-care and disability insurance premiums
  • Medical reimbursement plan
  • Education Assistance
  • Company-owned cars or other vehicles
  • Moving and Housing Benefits
  • Retirement plans
  • Memberships in fitness clubs
  • And many more….

What this means for high-earners: You and your business will split the payroll taxes on your salary. Thereafter, you can maximize fringe benefits in the Idaho C-Corporation which will drastically reduce profits that are taxable at the corporate level of 21%. Lastly, any left-over profits will be paid out in the form of dividends, which are taxed at a reduced qualified dividend rate of 15-20% and do not affect your ordinary income taxes.

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