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Reasonable Compensation Analysis

Data-backed guidance for setting owner and officer pay—so payroll, taxes, and distributions align with IRS expectations.

Why it matters

  • Compliance: S-Corp owners are required to take reasonable wages for services performed.
  • Risk reduction: A documented analysis helps defend payroll levels during inquiries or exams.
  • Planning: Balance W-2 wages and distributions to optimize overall tax outcomes.

What we deliver

  • Compensation ranges derived from role duties, industry, and geography
  • Assumptions and data sources summarized in a clear write-up
  • Actionable recommendations for wages and related payroll adjustments

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How it works

1

Scope the role

We document duties, time allocation, headcount oversight, and revenue impact.

2

Gather benchmarks

We assemble market data by function and region; adjust for company size and mix.

3

Analyze & recommend

We present a defensible range and a target wage with rationale and assumptions.

4

Implement & document

We help update payroll and retain the memo/report in your records.

What we’ll ask for

  • Owner/officer job summary (key duties and estimated time split)
  • Latest financials (top-line revenue, headcount, notable changes)
  • Current wage, distributions, and benefits (if any)
  • Industry, location, and any comparable roles in the company

FAQs

No. The standard is a reasonable range for the role and facts. We recommend a target within that range and document the assumptions.

Typically annually, or sooner if duties, revenue, or headcount change materially.

No analysis can eliminate risk, but having a documented methodology and supporting data is a strong defense if questions arise.
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