Reasonable Compensation for S-Corp Owners

Why Reasonable Compensation Is Required

The IRS requires S-Corporation shareholders who perform services for the business to receive reasonable compensation before taking distributions. Failure to comply can result in the IRS reclassifying distributions as wages, assessing back payroll taxes along with penalties and interest, increasing audit scrutiny, and creating compliance risks under IRS Circular 230. This requirement is mandatory and not optional.

Most S-Corp owners:

• Overpay payroll taxes

• Miscalculate reasonable compensation

• Miss key deductions

• Fail to coordinate retirement accounts with entity structure

• Use outdated structures that no longer match their revenue model

Dynamic Tax Advisory ensures your S-Corp works for you, not against you.

What Our Reasonable Compensation Report Includes

Each Reasonable Compensation Analysis is delivered as a formal written report rather than a rule-of-thumb estimate. The report incorporates industry-specific compensation benchmarks, a role-based analysis of duties performed, business size and geographic adjustments, relevant IRS authority and supporting case law, and a written narrative supporting the salary determination.

Reasonable Compensation Report

Dynamic Tax Advisory provides Reasonable Compensation Advisory Services for S-Corporation owners. This service delivers formal, audit-defensible Reasonable Compensation Analysis and Reports to support proper officer compensation and reduce IRS exposure.

Credible Documentation

All reports include supporting documentation. Comprehensive methodology reports are available for audit and litigation support, the most defensible position in the industry.

Intelligent Data

Developed and maintained by external data scientist, the source database contains over 100 million wages data points that meet strict confidence level requirements.

Reports in Minutes

Get instant and accurate insights with easy to run reports, step-by-step instructions, and full PDF reports with supporting documentation. The fastest, most credible way to determine Reasonable Compensation for tax compliance, tax strategy, and business valuations.

Protection and Compliance

Reduce risk for yourself with access to the three IRS approved approaches for calculating Reasonable Compensation through Dynamic Tax Advisory. Full documentation, blend with IRS criteria, court rulings, geographic data, and the exclusive wage database.

How S-Corp Tax Planning Works

Your plan identifies deductions, credits, investment strategies, and forward-looking tax opportunities tailored to your life. Every recommendation includes clear explanations and practical guidance.

Who Needs This Service

This service is essential for S-Corporation owners who actively work in the business, take shareholder distributions, operate high-profit S-Corporations, or have historically low officer wages. It is also a critical component of annual tax compliance and audit readiness. As a best practice, a Reasonable Compensation Report should be prepared annually and retained with your tax records.

Why Order the Report Now

Most S-Corporation audits related to reasonable compensation occur after returns are filed, when documentation is missing or unsupported. Ordering the Reasonable Compensation Report before filing ensures your salary position is documented, defensible, and aligned with IRS guidance at the time the return is prepared, not retroactively under audit pressure.

Reasonable Compensation Report

Dynamic Tax Advisory provides formal, audit-defensible Reasonable Compensation Reports at a fixed price of $649, for the first year of implementation. The report includes compensation benchmarking, an IRS-supported narrative, and audit-ready documentation designed for S-Corporation compliance. Reports should be updated annually or when income, duties, or business operations materially change.

What Happens After You Order

After completing your purchase, you will receive a secure intake request to gather details about your business, role, and compensation structure. Our team prepares your Reasonable Compensation Analysis using licensed data and IRS-aligned methodologies. Once completed, you receive a full written report in PDF format, ready to be retained with your tax records and used to support payroll and tax filings.

Get Started with Reasonable Compensation Advisory

If you are an S-Corporation owner actively working in your business, reasonable compensation documentation is a compliance requirement, not a preference. Ordering your Reasonable Compensation Report now ensures your salary is properly supported before filing and reduces the risk of IRS reclassification, penalties, and audit exposure.