I'm sorry I might have misunderstood you. But if you have money in your personal bank and none in the corporate bank, why would you pay yourself (and be taxed on it) rather than just use the money (your money) to cover the living expenses?
That's what I'm trying to understand from tptacek's post. Some hypotheses that come to mind:
1.) Putting money into the corporate bank and then taking it out as a nominal salary keeps you really honest with yourself. You can't say "There's money in my bank account, there's not much need for urgency", instead you see the corporate bank account dribbling dry just as if it were someone else you were paying.
2.) It reduces personal risk in case the startup goes bankrupt.
3.) It makes accounting & record-keeping easier for when the startup actually does start making money, since you already have systems setup.
4.) Minimum wage laws require it. I talked to a (Massachusetts-based) lawyer once that suggested this may be an issue. But then, if it is, how does that square with all the tech company CEOs that take $1 salaries?
5.) It lets you take advantage of certain personal financial products that are only available if you have earned income in a year, eg. Roth IRAs.
Re: 4, my understanding has been that the owner of a company does not have to necessarily be treated like an employee of the company, and that salary issues may be different for them. Also, most of those $1/year CEOs are usually earning many, many dollars in options, which I think count for the compensation rules.
