Hello!
I need help figuring out how to determine reasonable compensation and would like to know how you guys determine this. I only recommend the S Corp route to my clients who it will really make sense to, not just at a certain income level.
The hardest thing I face (and most I would assume) is determining reasonable compensation. I have a subscription to RC Reports, but I want some of the community's take on this. RC reports and bureau of labor statistics in this area say a psychologist makes on average 80K, but net income is going to be closer to 200K, which would leave a 40/60 split of wages vs income, which seems low to me. I also feel that maxing wages out 140 really defeats the purpose of the S Corp route.
Any suggestions/input is greatly appreciated!
Thank you!