Aureus Advisory Partners
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One of the Most Important Decisions
an S-Corp Owner Makes
An S-Corp election can create meaningful tax savings, but those savings depend on maintaining a reasonable compensation strategy. We help business owners evaluate owner payroll, shareholder distributions, and compensation requirements to support both compliance and long-term tax efficiency.
Ongoing compensation reviews
Compensation analysis
Payroll structure review
Distribution and compensation coordination
S-CORP ELECTION
Many S-Corp owners are unsure whether their salary is appropriate
One of the most common questions we hear is: how much should I pay myself? Unfortunately, there is no universal answer. The IRS does not provide a fixed salary chart for S-Corp owners. Instead, reasonable compensation depends on the facts and circumstances of each business. You may benefit from a reasonable compensation review if:
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You recently elected S-Corp status
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You have never documented how your salary was determined
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Your business profitability has increased significantly
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You are taking distributions but paying little or no salary
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You have not reviewed compensation in several years
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You are unsure whether your payroll is IRS compliant
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Your advisor selected a salary without explaining the methodology
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You want to reduce audit risk while maintaining tax efficiency
Who we commonly support
We regularly assist:
Growth-stage companies with increasing profitability
Marketing and creative agencies
Contractors and trades businesses
Professional service
firms
Consultants and advisors
Real estate professionals
S-Corp owners
Medical providers
Built for S-Corp owners who want a compensation strategy they can defend.
Reasonable compensation services
Compensation analysis
We evaluate the facts and circumstances surrounding the business to determine an appropriate compensation range based on owner responsibilities, business operations, and industry considerations.
Payroll structure review
We review existing payroll practices, officer compensation, payroll frequency, and compensation reporting to identify potential compliance concerns.
Documentation support
Reasonable compensation should be supported by a documented methodology. We help establish and maintain records that support the compensation analysis.
Ongoing
compensation reviews
As profitability changes, compensation strategies should evolve as well. We provide ongoing reviews to help ensure the approach remains appropriate over time.
Distribution and
compensation coordination
Salary and shareholder distributions work together. We help ensure compensation strategies are aligned with both IRS requirements and broader tax planning goals.
Reasonable compensation should be based on facts, documentation, and sound professional judgment. We help establish and maintain a strategy that holds up over time.
What we evaluate during a reasonable compensation review
The objective is to develop a compensation strategy that is both practical and defensible.
Our review may include:
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Industry compensation benchmarks
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Services performed by the owner
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Time devoted to the business
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Business profitability
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Revenue growth trends
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Geographic market considerations
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Existing payroll history
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Shareholder distribution history
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Number of employees
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Management responsibilities
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Comparable compensation data
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Long-term tax planning objectives
Reasonable compensation is rarely determined by a single number.
Reasonable does not mean maximizing nor minimazing salary.
Why reasonable compensation is often misunderstood
Many business owners first learn about S-Corps through conversations centered around tax savings. What is often left out is that S-Corp owners who actively work in the business are generally required to receive reasonable compensation before taking shareholder distributions.
The challenge is that reasonable requires understanding the work being performed, the economics of the business, and the owner's role within the company. Software cannot make that determination. Neither can a generic rule of thumb. A reasonable compensation strategy should be based on facts, documentation, and sound professional judgment.
Our process
Designed to give you clarity before any decision is made
1
Assessment
We review your business operations, compensation history, profitability, and current payroll structure.
2
Review
Our team evaluates the relevant factors that influence reasonable compensation and identifies any potential concerns.
3
Implementation
We provide recommendations, documentation support, and guidance regarding payroll and distribution planning.
4
Ongoing support
As your business evolves, we continue monitoring compensation strategies to help ensure they remain aligned with business operations and compliance requirements.
Frequently asked questions
What is reasonable compensation for an S-Corp owner?
Reasonable compensation depends on the services performed, business profitability, industry standards, time devoted to the business, and several other factors. There is no universal salary amount.
Can I take shareholder distributions instead of payroll?
Generally, active S-Corp owners should receive reasonable compensation through payroll before taking shareholder distributions.
How often should reasonable compensation be reviewed?
We typically recommend reviewing compensation whenever profitability changes significantly or when there are substantial changes to the owner's responsibilities.
Will a reasonable compensation review reduce audit risk?
A documented compensation methodology can help support the position taken by the business and demonstrate that compensation decisions were made thoughtfully and consistently.
Do you work with S-Corp owners throughout the United States?
Yes. We assist S-Corp owners nationwide and regularly advise businesses operating across multiple states.
Support your S-Corp with a defensible compensation strategy
Reasonable compensation is one of the most important compliance requirements associated with an S-Corp election. It influences payroll, distributions, retirement planning, tax strategy, and long-term risk management. Our role is to help business owners establish compensation strategies that are practical, supportable, and aligned with the realities of operating a growing business.
FREE DOWNLOAD
How Much Should You Pay Yourself as an S-Corp Owner?
A practical guide covering what reasonable compensation means, why it is so often misunderstood, the cost of getting it wrong, and how to build a salary you can defend.
This page is for general informational purposes only and does not constitute tax advice. Each situation must be reviewed individually.