In this publication, the IRS lists a number of fringe benefits that you can provide employees and details when/why they would be considered taxable vs. non-taxable. However, at the start of the document (and in virtually every subsection) it notes that these rules do not apply for partners or 2%+ shareholders.
So what are the taxation implications of adding fringe benefits for shareholders in a startup established as an S Corp?
While it is certainly not always the case, for my company (and the purposes of this question), there are no silent partners. All shareholders are working full-time at the company. Also, if it makes a big difference, all employees are shareholders.
I'm thinking things like:
- Insurance premiums: basic health coverage
- Insurance premiums: life, dental, optical, etc.
- Onsite meals
- Vehicles / gas / toll passes