Gutsy - I too own a Corp (Subchapter S) that makes $800-900K gross sales per year on average. I employ 6 people including myself. You need to get a better accountant. There are a lot of legal and reasonable ways to reduce your corporate taxes and still enjoy the benefits of not having to lay off people. My company paid a total of $3950 on our 1120S form for 2011 on 704K total receipts (cash basis). I made $150K while the other 5 made $60K-$70K each. I also covered 50% of health insurance. So again, if $3950 on my 1120 (which goes to gov’t to pay for things like infrastructure, etc) then that’s not a crazy nut that’s putting me underwater (or affecting my upper middle class lifestyle). My wife makes $40K so we’re under $250K in payroll per year among us - which allows us to have a decent living. Get a good accountant. You’ll be amazed at what they can do.