Isn't that just smart business? Employees pay payroll taxes whether they own the business or not. But the business owner can write-off payroll as a business expense, so in essence, they receive a business tax reduction for their own employee salary. Am I correct there?
It's more than just "smart business". The IRS frowns mightily on folks like me if I do not make myself an employee of my company and just take draws instead. That's considered an avoidance tactic to avoid paying FICA, Medicare etc.
And yes, an employee is an employee is an employee...whatever salary I pay myself is tallied up with everyone else's at the end of year.