Legal Question in Business Law in California

Does a C-Corp Have to Pay Salary to Sole Owner Working Full-Time?

A person is the only owner, director, and officer of a startup c-corp in California.

He is working full-time on the business, and the profits are growing.

The owner doesn't want to take any money out of the company at the startup stage. Is it legal for the c-corp to retain all profits and not pay any salary or dividend to the owner for a few years?

So another way to ask this question is: is a sole owner of a startup subject to minimum wage requirements?

Thanks.


Asked on 5/21/13, 8:36 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

No. The minimum wage laws don't apply to business owners. I would suggest that you might want to 'bone up" on some of the laws, regulations, rules and policies that affect small corporations of your size and style. This is something I learned back in my pre-lawyer days, when I was an entrepreneur.

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Answered on 5/21/13, 8:55 pm
Anthony Roach Law Office of Anthony A. Roach

I agree with Mr. Whipple. The minimum wage laws do not apply to you. You do need, however, to observe corporate formalities as much as possible, and follow the by laws and articles of incorporation.

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Answered on 5/23/13, 1:43 pm


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