S-Corp Owner? Ensure Your Salary Meets IRS Standards

As an S-Corp owner, you’ve likely heard the horror stories—IRS audits that blindside business owners with hefty fines, unexpected back-taxes, and months of stress. What you might not know is that one of the most common reasons the IRS targets S-Corp owners is due to “reasonable compensation” issues. If your salary isn’t in line with what the IRS considers reasonable, you’re at serious risk of an audit that could cripple your business.

Imagine getting hit with a surprise audit. The IRS decides you’ve underpaid yourself, reclassifies your distributions as wages, and now you’re suddenly responsible for paying back taxes on those amounts—plus penalties and interest. The damage can easily run into the tens of thousands, not to mention the time and stress of defending yourself. Worst of all, once you’re on their radar, the IRS is far more likely to flag your future returns, keeping your business under a microscope for years.

It’s a nightmare scenario, but there’s a way to protect yourself—and your business. That’s where Compensation Clarity™ Reports come in.

Why Reasonable Compensation Matters

The IRS takes reasonable compensation very seriously, especially when it comes to S-Corp owners. As a shareholder-employee, you’re required to pay yourself a salary that aligns with what someone in your role would typically earn in the industry. The problem is, figuring out what’s considered “reasonable” can be tough. It requires a careful analysis of your duties, industry standards, and even your company’s geographic location.

Too many business owners make the mistake of guessing or relying on outdated methods to determine their salary, which puts them at risk for an IRS audit. Once the IRS finds discrepancies in your compensation, they can reclassify your distributions as wages. This means back taxes, penalties, and a whole lot of stress you don’t need.

How The Compensation Clarity™ Report Protects You

Compensation Clarity™ Reports are designed to be your safety net, ensuring your salary falls within the IRS’s “reasonable” standards. Think of it as your first line of defense against costly IRS scrutiny. These reports provide an exact figure based on current, real-time data, showing exactly what the IRS expects you to pay yourself. No guessing, no stress, just peace of mind.

Here’s what makes Compensation Clarity™ the top choice for S-Corp owners:

• Instant, Expert-Driven Reports: No more endless calculations or uncertainty. With Compensation Clarity™, you get fast, accurate insights that are tailored to your business, all based on the latest industry data.

• Backed by Data Scientists: Our reports are powered by over 86 million wage data points, and 35 million of those are exclusive to us. Supported by a team of data scientists, we provide the most precise compensation benchmarks available.

• IRS-Approved Methods: We don’t rely on guesses or generalized tools. Compensation Clarity™ uses three IRS-approved methods to calculate your salary, ensuring it’s defensible in the event of an audit.

• Full Compliance and Audit Support: With comprehensive documentation and methodology reports, you’re fully prepared if the IRS ever comes knocking. Our reports provide the defensible position you need to protect your business from penalties.

Think of It as “Audit Insurance”

Now you can have peace of mind knowing your compensation is fully compliant with IRS standards. Compared to the potential cost of an audit—which can easily run into the thousands—this is a small investment to safeguard your business. Plus, with our yearly subscription you can save money while ensuring your reasonable compensation number stays current each and every tax year. You’ll always stay compliant as your business grows and evolves.

Don’t Leave It to Chance

The consequences of underpaying or overpaying yourself can be severe. With a Compensation Clarity™ Report, you can eliminate the guesswork and ensure that your salary is aligned with IRS regulations—protecting your business, your profits, and your peace of mind.

Why gamble with your future? Get your Compensation Clarity™ Report today and rest easy knowing that your salary is 100% defensible.

Act Now

Don’t wait for an IRS letter to show up at your door. Click here to order your Compensation Clarity™ Report and ensure your business is compliant and protected.