S-Corp Payroll
S-Corp Payroll for a Single Owner: Forms 941, 940, and the 2026 Deposit Rules
The moment your S-Corp election takes effect, you become an employer, even if the only employee is you. That means EFTPS deposits, quarterly Forms 941, an annual Form 940, and a W-2. Here is the whole compliance calendar for 2026, plus the December fix if you are already behind.
Say you filed Form 2553 back in January, the IRS mailed you a CP261 acceptance letter, and it is now July. You have been paying yourself the same way you always did, by moving money from the business account to your personal account whenever you needed it. No withholding, no payroll filings, nothing. That is the single most common state I see new S-Corp owners in at midyear, and the good news is that it is completely fixable before December. This is a theoretical owner, not a client, but the calendar below is the same for everyone.
Do I have to run payroll for my S-Corp?
Yes. Under IRC §3121(d)(1), a corporate officer who performs services is an employee, and the IRS requires an S-Corp to pay reasonable compensation through actual payroll before the owner takes distributions. Rev. Rul. 74-44 lets the IRS reclassify distributions as wages when an owner skips salary, with back payroll taxes and penalties attached. How much salary is enough is its own question, and I covered the case law and the IRS factors in the reasonable compensation guide. This post is about the mechanics once you have picked a number: what comes out of the paycheck, where the money goes, and which forms are due when.
What a $60,000 salary actually costs
Every paycheck carries two layers of tax. The employee side is 6.2% Social Security under IRC §3101 plus 1.45% Medicare, withheld from your gross pay along with federal income tax based on your W-4. The employer side is a matching 6.2% and 1.45% under IRC §3111, paid by the corporation on top of your salary. The 6.2% pieces stop at the 2026 Social Security wage base of $184,500; Medicare has no cap, and an extra 0.9% withholding kicks in under IRC §3102(f) once your wages from the corporation pass $200,000. The corporation also owes federal unemployment tax under IRC §3301: nominally 6.0% of your first $7,000 of wages, but the state credit under IRC §3302 cuts it to 0.6% in most states, a whopping $42 a year.
On a $60,000 salary, Social Security and Medicare total $9,180, split evenly between you and the corporation, plus $42 of federal unemployment tax. The corporation deducts its $4,632 employer share, and the $4,590 employee share comes out of your paychecks. Here is the full breakdown.
Employee side
Withheld from your paychecks
Comes out of your $60,000, so it is money you were paying as SE tax anyway.
Employer side
Paid by the corporation on top
Fully deductible by the S-Corp, which trims its true cost below the sticker price.
Deposits: EFTPS and the monthly schedule
Withheld taxes do not wait for the quarterly return. They get deposited through EFTPS, the free federal system, and enrollment takes about a week because the IRS mails you a PIN, so sign up before your first payroll. A new employer starts as a monthly depositor, and each month's withheld income tax and FICA must reach the IRS through EFTPS by the 15th of the following month. If your total liability for a quarter is under $2,500, you can skip deposits and pay the balance with that quarter's Form 941. Do not count on qualifying, though: FICA alone on a $60,000 salary runs about $765 a month, which is $2,295 a quarter, and once federal income tax withholding stacks on top most owners clear the $2,500 line. The deposit schedules live in Treas. Reg. §31.6302-1, summarized in IRS Publication 15. The semiweekly schedule only applies once your liability in the lookback period passes $50,000 a year, which a typical one-owner salary never approaches.
Miss a deposit and the meter starts immediately. IRC §6656 sets the failure-to-deposit penalty at 2% of the shortfall for deposits 1 to 5 days late, 5% for 6 to 15 days, 10% beyond 15 days, and 15% if the IRS has to demand payment. Withheld taxes are also trust fund taxes, and IRC §6672 makes you personally liable for them at 100%. The corporate shield does nothing here.
The forms: 941 quarterly, 940 and W-2 once a year
Form 941 reports wages, withholding, and FICA each quarter, due the last day of the month after the quarter ends: April 30, July 31, October 31, and January 31, rolling to the next business day when that lands on a weekend. For 2026 that means the Q3 return is due November 2, since October 31 is a Saturday. File all four even for quarters with zero payroll once your account is open, because an expected-but-missing 941 generates IRS notices. Its little sibling, Form 944, is annual, but only for employers the IRS has notified in writing, generally those under $1,000 of yearly liability. A reasonable owner salary puts you well past that, so plan on the 941.
Form 940, the FUTA return, is annual and due January 31. Since your total FUTA is $42, under the $500 threshold for required quarterly deposits, you just pay it with the return. The W-2 goes to both you and the Social Security Administration by January 31, which for 2026 wages means February 1, 2027, since the 31st falls on a Sunday. SSA's Business Services Online files it free. Your state will want its own accounts too, one for income tax withholding and one for unemployment insurance, and a handful of states exempt corporate officers from unemployment coverage or let them opt out, so check before you pay in.
Behind since January? The December payroll fix
Back to our July owner. You do not need to recreate six months of missed payrolls. You need to make sure that by December 31 the corporation has paid you a reasonable salary for the part of the year the election covers, and one payroll can do that. A single late-year payroll is legal, and it has a real advantage. Under IRC §6654(g), federal income tax withholding is treated as paid evenly across all four quarters no matter when it actually comes out of your pay, so a large December withholding can retroactively cover estimated tax you should have paid in April. If you skipped quarterly estimates on your distributions, cranking up the withholding on a December payroll is the cleanest repair available. Two housekeeping items while you are at it: run your health insurance premiums through Box 1 of the W-2 under the 2% shareholder rules, or you lose the deduction, and set up an accountable plan so home office and mileage reimbursements come out pre-tax.
What I would actually do
Do not hand-file any of this. Payroll software runs $400 to $700 a year for a single employee, calculates the withholding, makes the EFTPS deposits, and files the 941s, 940, and W-2 automatically. That subscription is part of the real cost of the election, alongside the 1120-S prep fee, and your savings have to clear all of it. Before you set any of this up, run the EntityIQ S-Corp calculator to confirm the election pencils out at your profit level, and if it does, the savings math will dwarf a payroll subscription many times over.
This article is educational and is not legal or tax advice. The figures are 2026 numbers, the owner described is theoretical, and deposit schedules depend on your own liability history. Please consult a qualified CPA or EA about your payroll setup.