Relatives on the Payroll

lucymichaels · PayPerShop Newbie Joined: 15 Jan 2008 Posts: 1

Please settle an argument - a small business, incorporated, includes the wife of the president on the payroll. She does no work, holds no title, has no spot in the workplace to do work. She receives a paycheck - which is treated as any other employee (taxes and normal deductions). She also receives a benefit of a company paid pension (401K) contribution. Is this legal? If not, where can I find the back-up?

Jennym254 · PayPerShop Regular Joined: 22 Nov 2004 Posts: 72

I would be interested in hearing qualified answers to this one as well. I had a similar situation in a previous employment, but since the auditors were well aware of the situation I did nothing about it (small cog, big machine type of feeling).