If you own an S-corporation and take little or no salary, the proposed tax legislation is aimed at you.

One advantage an S-corporation has over an LLC is that the profits are not treated as self-employment income. This omission in the tax law allows S-corporation owners to escape the extra 15.3% of income up to a base of $106,800. Partnerships, too, have this luxury.

Some S-corporation owners take little of no salary thinking that they will escape the clutches of this extra tax. However, if caught, the IRS imposes the taxes with penalties and interest. The proper strategy is for the owner to pay him/herself a reasonable salary, one that would match what they would receive if they were not the owner.

The proposed tax legislation may abolish this perk by requiring any shareholder of an S-corporation, and limited partner to pay self-employment tax on his/her share of the firm's income that comes from the shareholder's services. This would result in these owners skirting the self-employment tax on draws and dividends.

Consult your tax advisor about the specific challenges that face you as an owner.