Request a reasonable compensation analysis!
Are you an S-Corp shareholder and you are unsure if your salary aligns with the tasks, duties and description of your role within your corporation?
S-Corps are an incredible tool to reduce self-employment tax!
In fact, they can help to reduce your tax bill by several thousands each year. However, you want to be careful when it comes to setting your salary.
​
Actually, it is extremely important. Here's Why:
-
If your salary is too low and you get caught by the IRS, you will owe additional payroll and income tax, plus penalties, which can be very costly.
-
In most cases, the IRS will expand the audit to cover three years and then add the income and penalties for those previous three years.
-
After getting caught, you likely will be stuck with this higher salary, which defeats the original purpose of saving on self-employment taxes.
-
Also, your accountant can get slapped with preparer penalties.
