Thanks for all this great info.
With regard to the requirement that the owner must be a legit employee of the business, is the owner required to be on the payroll ? In this case the owner is certainly an employee and will work well over the 1,000 annual hours, but as a start-up he would like to conserve cash to be available to get things going and he has other personal assets to live on, so he doesn’t “need” a payroll.
Must he take payroll?
Thank you very much for your question. We’ve actually been doing some research on this issue while updating some of our ROBS content. The short answer to your question is no, a business owner who is working in a company they funded with a ROBS is not required to take payroll. In fact, based on our research the IRS actually casts a critical eye on business owners who use a ROBS and take excessive salaries or personal benefits – you can even get yourself in trouble by using company profit for business use.
Guidant is the best provider we’ve found for Rollover for Business Startups and they have a great article right on their website about owners taking compensation from their company. Be sure to check it out!
Thanks again for reading!