My startup is at the stage where I'm considering forming an LLC, S-Corp or C-Corp. I've been reading a lot, on this site and others, about the various advantages and disadvantages of the 3 main approaches, and I have a specific question about an S-corp. (Which may apply to the other structures also, I just don't know.)
A very SEO friendly website, which also sells incorporation kits and incorporation pamphlets mentions that S-corps must pay a "reasonable salary" to the shareholder-employees. Not doing so really raises the risk of an IRS audit.
We are an early stage startup, I'm the only full-timer, and only 1 other person is working half time (there is a small assortment of others working less than half time)
We are so early stage that we do not have any income, indeed, our product isn't even in the alpha stage yet and income could be far away. I don't anticipate having sufficient income this year to pay a reasonable salary to all the employee-shareholders. Time and time again the websites I've visited say "Nobody works for nothing. Well, we do. We work for equity."
So how can I pay a salary without sales? Clearly I can't, so how can I avoid IRS trouble?