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How to run S-corp owner payroll yourself

If you own a small S corporation and work in the business, you are also an employee. That means you run payroll for yourself, and maybe for a few other people too. The work isn't hard once it's set up. You calculate pay and taxes, send the take-home pay, deposit the taxes, and file a few forms on time.

This guide walks through the steps in order.

Start with reasonable compensation

Owners who work in the business should pay themselves a reasonable wage before taking distributions. The wage goes through payroll, with taxes withheld and paid. Distributions are separate and don't go through payroll.

What counts as reasonable depends on your role, your hours and what similar work pays. If you're not sure where your number should land, a CPA can help you set it. Once you pick an amount, decide how often you'll pay it (monthly, twice a month, every two weeks) and keep to that schedule.

Set up your accounts before the first payday

Do these once, before you run your first payroll.

  1. Get an EIN. Your corporation needs an Employer Identification Number from the IRS. You'll use it on every payroll form and tax deposit.
  2. Enroll in EFTPS. The Electronic Federal Tax Payment System is how you deposit federal payroll taxes. After you enroll, your PIN arrives by mail, usually in about 5 to 7 business days. Enroll early so it's ready before your first deposit is due.
  3. Register with your state. Most states require a state withholding account and a separate state unemployment account. Each state's rules and portals are different, so check your state's revenue and workforce agencies.
  4. Collect employee forms. Each employee, including you, should fill out:
    • Form W-4 (federal withholding)
    • Your state's withholding form, if it has one
    • Form I-9 (employment eligibility)

Keep these on file. You'll need the W-4 and state form every time you calculate withholding.

Run each payroll

On every payday, work through the same steps for each employee.

  1. Figure gross pay. That's the salary or hourly wages for the pay period.
  2. Calculate federal income tax withholding. Use IRS Publication 15-T and the employee's Form W-4. The percentage method in Pub 15-T works for any pay amount.
  3. Calculate Social Security. Withhold 6.2% from the employee's wages, and the business pays a matching 6.2%. This applies only up to the annual wage base, which is $184,500 for 2026. Once an employee's wages for the year pass that amount, stop both shares.
  4. Calculate Medicare. Withhold 1.45% from the employee, and the business pays a matching 1.45%. There is no wage cap. Once an employee's wages for the year go over $200,000, also withhold an extra 0.9% Additional Medicare tax from the employee. The business doesn't match this part.
  5. Calculate FUTA. Federal unemployment tax is paid by the business only. After the usual state credit, it's 0.6% of the first $7,000 of each employee's wages for the year.
  6. Calculate state taxes. State income tax withholding and state unemployment tax vary by state. Use your state's current tables and the rate your state assigned you.
  7. Pay the take-home amount. Subtract the employee's withholdings from gross pay. Send the net amount from the business bank account, not your personal account.
  8. Record everything. Write down gross pay, each tax withheld, the employer taxes owed and the net pay. You'll need these totals for deposits and forms.

Deposit federal taxes through EFTPS

Federal income tax withheld, plus both shares of Social Security and Medicare, get deposited through EFTPS. Your deposit schedule depends on the IRS lookback period.

FUTA is deposited separately through EFTPS too. Check current IRS rules for when a FUTA deposit is due.

State withholding and state unemployment get paid through your state's own portal on the state's schedule.

File quarterly and yearly forms

Payroll comes with a short list of recurring filings.

Form 941 (quarterly). It reports wages, federal withholding, Social Security and Medicare for the quarter. It's due the last day of the month after each quarter ends:

Form 940 (annual). It reports FUTA for the year. It's due January 31.

Forms W-2 and W-3 (annual). Give each employee their W-2 by January 31. File the W-2s and the W-3 transmittal with the Social Security Administration by January 31 too. File through SSA Business Services Online. Don't file the Copy A you print from the IRS website, since those printouts aren't meant for filing.

State forms. Your state will have its own withholding and unemployment returns. Check its due dates.

If a due date falls on a weekend or legal holiday, it moves to the next business day.

Watch for a few special cases

Health insurance for owners. If the S corporation pays health insurance for a shareholder who owns more than 2%, it gets special treatment on the W-2. The rules are specific, so ask a CPA how to handle it for your company.

Hitting the wage limits. Keep track of each employee's year-to-date wages. That tells you when to stop Social Security, when to stop FUTA, and when to start Additional Medicare.

Changes during the year. If an employee turns in a new W-4 or state form, use it starting with the next payroll.

Keep good records

Keep payroll records for at least four years. That includes:

Store them somewhere safe, and make sure you can find them if the IRS or your state asks.

Quick payroll checklist

Where Selfroll fits

Selfroll is a free tool that does the payroll math for federal and Oklahoma payroll and fills draft copies of Forms 941, 940, W-2, W-3 and the Oklahoma WTH-10001 for you to review. It also gives you step-by-step instructions and a deadline calendar. You still send the pay, make the deposits and file the forms yourself.

This guide is general information, not tax or legal advice. Check current IRS and state rules or ask a CPA.