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BLS Data Is a Starting Point and Not a Defensible Reasonable Compensation Conclusion One of the most common mistakes I see in Reasonable Compensation analyses is the assumption that a Bureau of Labor Statistics (BLS) wage figure is sufficient to support an S corporation shareholder’s salary. A practitioner identifies a job title, finds a wage …

Why BLS Data Isn’t Enough Read More »

That's why we're excited to introduce two of our newest platform features: Wage Benchmarking and the CYA Log. Together, these enhancements help firms quickly identify potential Reasonable Compensation risk, determine when a more detailed analysis is appropriate, and maintain a documented record of compliance recommendations, all within RCReports. If you haven't seen these new features …

What’s New at RCReports? Introducing Benchmarking and the CYA Log Read More »

Post‑tax season is the ideal time to step back and proactively review reasonable compensation for S corporation clients, before payroll decisions compound, distributions stack up, and next season’s issues begin to take shape. For many accounting firms, reasonable compensation becomes a priority only at two moments, when an S corporation client is under audit, or …

Post-Tax Season Is the Best Time to Revisit Reasonable Compensation for S Corp Clients Read More »

If your firm serves S-Corporation clients, reasonable compensation is not optional. It is a core compliance requirement and one of the most important areas to document properly. Yet many firms still rely on partner judgment, prior-year estimates, or rules of thumb rather than a consistent, documented process. That approach may feel efficient in the moment, …

Have S Corp Clients? Here’s a Better Way to Handle Reasonable Compensation Read More »

When business owners hear the term reasonable compensation, many assume it’s as simple as pulling salary data from free sources like the Bureau of Labor Statistics (BLS), Glassdoor, PayScale, or Salary.com. While these platforms provide useful insights for employees or employers, they fail to capture the complexity of what reasonable compensation truly represents, especially for …

Why Free Benchmarking Tools Fall Short in Determining Reasonable Compensation Read More »

If you work with S corporations, you’ve probably seen the CP261 notice—the IRS letter confirming an S election. For years, it was a simple acknowledgment. That changed in late 2023. The IRS added language about reasonable compensation, and it’s not just a suggestion. It’s a compliance warning.  What Changed?  The revised notice now includes language …

IRS CP261 Update: What Accountants Should Tell Their S Corp Clients Read More »

It started as a dream. In the middle of the pandemic, when hospitals overflowed and the world turned upside down, one traveling physician decided to slow down and build something new—a peaceful farm-to-table campground where people could reconnect with nature. But what began as a passion project soon turned into a tax nightmare. Mixing business …

Farm to Table, Physician Read More »

Picture this: the icy waters of the Bering Strait, waves thrashing against rusty crab boats, and 32 rugged fishermen hauling in traps with heavy Alaskan king crab. For months, they live at sea. They’re cold, isolated, and driven by the hope that this catch will be the one. But when they return to shore, the …

32 Fishermen, 1 IRS Audit Read More »

Common S Corp Tax Deductions (And What to Know Before You Claim Them) Before diving into what your S Corp can write off, it’s important to start with how much you're paying yourself. Reasonable Compensation is not just about compliance. It also impacts your ability to take distributions and claim certain deductions. If you haven’t …

S Corp Tax Deductions You Should Know (And How Salary Affects Them) Read More »