REASONABLE COMPENSATION FOR SHAREHOLDER-EMPLOYEES OF S CORPS
S Corporations have been under additional scrutiny lately by the IRS as many small businesses have not been in compliance when it comes to reasonable compensation for reporting wages on a Form W-2.
1) Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances.
2) Distributions by an S Corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.
3) Determining an employee’s reasonable compensation is dependent upon a number of factors and is not an exact science.
4) The key to establishing reasonable compensation is determining the services of non-shareholder employees, the capital and equipment used in performing services, and the actual services of the shareholder-owner.
5) Factors considered by the courts in determining reasonable compensation are: training and experience, duties and responsibilities, time and effort devoted to the business, dividend history, payments to non-shareholder employees, timing and manner of paying bonuses to key people, what comparable business pay for similar services, compensation agreements and the use of a formula to determine compensation.
All of the above points play a role of determining how much a shareholder-owner of an S corporation should get paid. We all understand that the goal is to save payroll taxes, but at what at price? Also, a very key point is the less wages reported, the less you can fund your retirement plans!
Lincolnshire, IL 60069 | CPA Firms
List of Certified Public Accountants:
Travis & Warzala, Ltd.
Mowery & Schoenfeld
Travis & Warzala, Ltd.
Mowery & Schoenfeld
Jeffrey B. Travis | JEFF TRAVIS, CPA | jeffreybtraviscpa.com | 847-267-0300: Arlington Heights, IL 60005 | CPA Firms
Jeffrey B. Travis | JEFF TRAVIS, CPA | jeffreybtraviscpa.com | 847-267-0300: Arlington Heights, IL 60005 | CPA Firms: List of Certified Public Accountants: Travis & Warzala, Ltd. Weiss & Thompson, PC
Jeffrey B. Travis | JEFF TRAVIS, CPA | jeffreybtraviscpa.com | 847-267-0300: Glenview, IL 60026 | CPA Firms
Jeffrey B. Travis | JEFF TRAVIS, CPA | jeffreybtraviscpa.com | 847-267-0300: Glenview, IL 60026 | CPA Firms: Certified Public Accountants: Travis & Warzala, Ltd. Weiss & Company LLP
Jeffrey B. Travis | JEFF TRAVIS, CPA | jeffreybtraviscpa.com | 847-267-0300: RESIDENT PHYSICIANS MOST COMMON TAX ISSUES | Jeffr...
Jeffrey B. Travis | JEFF TRAVIS, CPA | jeffreybtraviscpa.com | 847-267-0300: RESIDENT PHYSICIANS MOST COMMON TAX ISSUES | Jeffr...: RESIDENT PHYSICIANS MOST COMMON TAX ISSUES 1. Proper use of Form 1040EZ. 2. Proper reporting of moonlighting income (Form 1099MISC incom...
WELCOME TO TRAVIS & WARZALA, LTD.
WELCOME TO TRAVIS & WARZALA, LTD.
Travis & Warzala LTD. is a progressive Chicago land certified public accounting, consulting and taxation firm dedicated to helping you achieve your business goals. We strive to maintain close working relationships with our clients to ensure the highest, most consistent level of service.
We specialize in assisting closely held companies and provide a high level of quality and services both to business and individual clients. With our specialty niche services for “start-up” companies, which set our firm apart from others, we are in the best strategic position to enhance our client’s prosperity.
Our areas of practice include, but are not limited to, restaurants, manufacturing & distribution, construction industry, professional service firms, real estate, franchises, retirement and benefit plans consulting, and tax services for businesses and individuals.
A large portion of our firm is the health care practice unit. This is a robust part of our firm providing technical tax, consulting and accounting services as well as entrepreneurial business advice. Our greatest contribution to our health care clients is our health care experience and our ability to advise them and perform services including accounting assistance, compilation of financial statements, establishment and monitoring of internal controls, practice benchmarking against local and national practice groups, payroll tax preparation and filings, income tax compliance and planning, and practice start-up services.
In addition, our speaking engagements in front of resident, fellow and attending physicians, with other types of professionals including financial planners, bankers, attorneys, insurance and pension administration firms lends our credibility as a major business force for clients to understand the basics of accounting and taxation for a successful transition to the business world. Since some of our clients have gone through medical training in Chicago and have subsequently moved, our retention of these physicians gives us a wealth of information to share regarding state tax implications, job prospecting and real estate issues.
By providing comprehensive expertise and a proactive approach to our clients, our vision is to identify opportunities that create value for our clients while continuously expanding to address their unique needs.
Travis & Warzala LTD. is a progressive Chicago land certified public accounting, consulting and taxation firm dedicated to helping you achieve your business goals. We strive to maintain close working relationships with our clients to ensure the highest, most consistent level of service.
We specialize in assisting closely held companies and provide a high level of quality and services both to business and individual clients. With our specialty niche services for “start-up” companies, which set our firm apart from others, we are in the best strategic position to enhance our client’s prosperity.
Our areas of practice include, but are not limited to, restaurants, manufacturing & distribution, construction industry, professional service firms, real estate, franchises, retirement and benefit plans consulting, and tax services for businesses and individuals.
A large portion of our firm is the health care practice unit. This is a robust part of our firm providing technical tax, consulting and accounting services as well as entrepreneurial business advice. Our greatest contribution to our health care clients is our health care experience and our ability to advise them and perform services including accounting assistance, compilation of financial statements, establishment and monitoring of internal controls, practice benchmarking against local and national practice groups, payroll tax preparation and filings, income tax compliance and planning, and practice start-up services.
In addition, our speaking engagements in front of resident, fellow and attending physicians, with other types of professionals including financial planners, bankers, attorneys, insurance and pension administration firms lends our credibility as a major business force for clients to understand the basics of accounting and taxation for a successful transition to the business world. Since some of our clients have gone through medical training in Chicago and have subsequently moved, our retention of these physicians gives us a wealth of information to share regarding state tax implications, job prospecting and real estate issues.
By providing comprehensive expertise and a proactive approach to our clients, our vision is to identify opportunities that create value for our clients while continuously expanding to address their unique needs.
Jeffrey B. Travis, CPA | Jeffrey B Travis | JEFF TRAVIS CPA | jeffreybtraviscpa.com: RESIDENT PHYSICIANS MOST COMMON TAX ISSUES | Jeffr...
Jeffrey B. Travis, CPA | Jeffrey B Travis | JEFF TRAVIS CPA | jeffreybtraviscpa.com: RESIDENT PHYSICIANS MOST COMMON TAX ISSUES | Jeffr...: RESIDENT PHYSICIANS MOST COMMON TAX ISSUES 1. Proper use of Form 1040EZ. 2. Proper reporting of moonlighting income (Form 1099MISC incom...
Subscribe to:
Posts (Atom)