A Tool for CPA's, EA's, Tax Advisors,
and Forensic Accountants
Knowing a Reasonable Compensation figure is only half the equation. Putting it into context for the taxpayer or business owner is your role, as the Trusted Advisor. We built RCReports for you.
RCReports can determine Reasonable Compensation for Small and Medium Closely-held business owners from start-up to:
- $25m in Gross Revenue
- 250 Employees
Choose the approach(s) that best fit your clients business:
Cost Approach (AKA Many Hats Approach) - The Cost Approach breaks the duties of the business owner into its components such as: company administration, accounting, finance, marketing, advertising, engineering, purchasing, etc.
The Cost Approach breaks down the time spent by the business owner into the various duties performed and quantifies the amount of time devoted to the different duties. Next, salary surveys are used to determine a comparable wage for each job duty performed by the business owner, then added up to arrive at the total "cost" to replace the services of the business owner.
The Cost Approach generally works best for small businesses where the business owner provides multiple services for the business (wears many hats). Cost (AKA Many Hats Approach)
Market Approach (AKA Industry Standard Approach) - Compares the business owner's compensation to compensation within the same industry. The market approach focuses as much as possible on the owner's business and the specific position being analyzed (often the CEO or General Manager who also owns the business). The question to be answered is: How much compensation would be paid for this same position, held by a non-owner in an arms-length employment relationship, at a similar company?
The Market Approach generally works best for medium and large businesses where the business owner provides only one duty: management of the business. Market (AKA Industry Comparison Approach)
Income Approach (AKA Independent Investors Test) - Seeks to determine whether a hypothetical investor would be satisfied with their return on investment when looking at the financial performance of the business in conjunction with the compensation level of the owner.
The income approach can only be correctly applied when the Fair Market Value (FMV) of the company is available for each year that compensation is examined.
The rationale behind the Independent Investor Test is that investors pay employees to work to increase the value of the assets entrusted to their management. A high rate of return indicates that the assets' value increased and that the employee provided valuable services. Thus, if investors obtain returns above what they should reasonably expect, an employee's salary is presumptively reasonable.
The Income Approach generally works best when there is no comparability data available. Income (AKA Independent Investors Test)
Exclusive Wage Database
We synthesize a proprietary blend of IRS criteria, court rulings, geographic data and our Exclusive database of wages to Accurately and Objectively determine Reasonable Compensation for Closely-Held Business Owners.
With more than 12,917,500 wage data points (60%+ exclusive to RCReports), 4 Reports and 3 Approaches, you'll definitely find what you're looking for.
Features you'll Love
Results are available immediately. What used to take hours, sometimes days, now takes only a few minutes.
- Look Ma, no software to download, install or update. RCReports operates in the cloud: simply login and begin generating reports immediately.
- Need to adjust or fine tune a report? No worries. - All reports have a 30 day edit window.
- Fast. Did we already mention that? Not only report generation, our platform is also crazy fast.
Packed with administrative features to keep you organized:
- Add as many additional users as needed
- Share administrative responsibilities, clients and more using customizable permissions for each user
- Detailed monthly firm accounting reports for easy client tracking and billing
- Client reports are stored indefinitely within your RCReports dashboard
Tools and More...
Lots more helpful tools to make your job easier:
- Warp Speed Wages - Just a little wage curious? Look up a wage at light speed without running a report
- Entity Planner - Ohh man is this a helpful tool thanks to the TCJA (updated version coming soon!)
- Resource Library - Everything you're looking for in one place:
- Issue Letters
- Engagement Letters
- Preparer Penalty Checklist & Stress Test
- Court Cases
- And much more...
Proactive Support - Meet your Hugger
Our Huggers are here to assist you as you jump in, answer your questions & elevate your ability to run reports... each of us here at RCReports spends time as a Hugger, including pinch hitting for a fellow Hugger when they're out - climbing a Fourteener.
Huggers as a concept was not our idea & to give credit where credit is due: Fullstory and Jaclyn Spangler, thanks for defining what we struggled to...
Coffee, Labradors & Foosball
Our folks work intelligently with the help of good coffee (thanks Jura and Illy), relieve stress playing with Annabelle and Augie, (the office dogs), and holding impromptu Foosball tournaments - often with who's paying for lunch on the line.
We are a small, enthusiastic group of code monkeys, math savants, huggers, our legal guy (he made us include him), CPA's and marketing gurus.
If you're smart, wacky and interested in what opportunities are available here, Give us a Shout.