By Paul S. Hamann & Jack Salewski, CPA, CGMA
Since we released RCReports V1 almost five years ago I have asked users WHY? Why did you register? Why did you subscribe? Why did you renew?
The answers have helped us better understand how RCReports was being used, where it was helpful, and where it needed improvement.
I would like to sincerely thank all who took a few minutes to respond. The stories shared with us have provided encouragement and direction to me and everyone at RCReports, which is why I respond to each and every one of them.
For those of you who don’t know, we also teach extensively on the issue of Reasonable Compensation. We have had more than 200 IRS and Treasury agents take one of our courses. If you’re curious what they think, we include some of their feedback at the end.
Hi Paul. I love RCReports. It is such a powerful tool that I use with all my S-Corporation clients. I’ve been able to provide them with peace of mind if audited by the IRS. Several of my tax planning clients have been able to save thousands and I feel really good about being able to provide them such a great service. I recommend that clients do one every year. Thank you! ~ R.B. Gladstone, MO
I subscribed for several reasons, which ultimately will make my services stand out from my competitors. When I see owners paying themselves either a very low, or no payroll at all we always have a conversation regarding reasonable compensation. Most of them have no idea how they came up with their paycheck amount. RCReports appears to be the perfect solution for helping owners be compliant with their compensation. ~ P.M. Buffalo, NY
I’ve got multiple S-Corp clients and always struggle with reasonable comp. I’m a Certified Tax Coach and saw you in Utah (thanks for the drinks, BTW ? ), so RCReports will be very helpful when doing tax planning engagements. ~ S.T. Tomball, TX
We subscribed because we’re a CPA firm and a few of our clients are asking us the question of how much salary they should pay themselves. In addition, we think there are other clients that could benefit from the service and we plan on offering this as a new service. ~ K.K. Melbourne, FL
I help small businesses set up S-corps all the time. The biggest headache in this is determining reasonable compensation. ~ M.B. Sandy, UT
Hi Paul, I signed up because I have a number of S Corp clients that do not understand or know what their salary should be and in some instances have not been taking a salary. I have been trying to determine for a while now how to make this easier for them and us. ~ K.A. Charlotte, NC
I wanted to be able to solidify a position on reasonable compensation for clients. We work together as a team to make sure the clients are getting the best tax and financial advice for their unique situation. Having access to this will help us do that, and expand our offering to our clients. I’m looking forward to being able to put this to a lot of use! ~ R.B Winston Salem, NC
I have been an accountant for 36 years, this is a concern of mine but never had any tools to do anything about it. Especially since I read in a tax newsletter that the IRS is ramping up its audits of Sub Chapter S corporations in the future. ~ L.R. Fayetteville, AR
Hello Paul! I signed up for your product because I have a few high-end S Corp clients who could benefit from making sure they are not overpaying wages. I realize the plus side is to also have supporting documentation that will alert us if they are paying too little as well. Looking forward to working in the software. Thank you. ~ L.S. Eudora, KS
I signed up because I’ve been pressing my clients to make sure they’re paying themselves a reasonable wage in the eyes of the IRS. It’s a topic that’s been coming up a lot lately, and I figured RCReports would be a huge help in deriving this figure. ~ S.H. Bayfield, CO
RCReports was important because we were converting an LLC partnership to an LLC S Corporation. We needed to make sure that the salary set for the officers/members was appropriate given that whatever it was, it was going to be less than the partnership allocations of SE income. ~ S.B. Springfield, MO
We found RCReports was helpful in evaluating reasonable comp for our s corporations. Thank you. ~ A.M. New Holland, PA
I think it’s valuable to have a report of reasonable compensation in all my S Corporation files. ~ R.O. Tempe, AZ
I wanted to set up audit support for S-Corp owners. Especially new clients who were paying themselves $35k that should have been over $100k. ~ T.O. The Woodlands, TX
Always looking for good resources in our practice and RCReports can also help me with the business valuation process. ~ G.M. Fort Wayne, IN
The data that you provide is a lot more accurate than using a rule of thumb or trying to figure out what is reasonable compensation for any particular job classification. I think it will be very helpful for me when trying to figure out what the shareholders' reasonable compensation should be. Plus I think it could be very useful in case of client audit by the IRS regarding reasonable compensation. I am looking forward to using in my practice. ~ B.G. Corona, CA
I signed up because I have several S Corp clients who may find this service useful, plus I appreciate the practical resources you offer. ~ M.W. Evanston, IL
I have several clients for whom the reasonable comp issue is a factor. ~ L.R. Austin, TX
I have a small but growing base of S-Corp owner clients and non-S-Corp business owner clients whom I’d like to advise to consider becoming S-Corp’s. Since the biggest reason many business owners become S-Corp’s is the traditional strategy of saving on self-employment taxes, I’d like to be able to advise them on the exact amount they should pay themselves each year in salary to minimize taxes present and future (and 3 years prior by amending if desired), while simultaneously minimizing audit risks, specifically IRS re-characterization risks. ~ M.W. Cincinnati, OH
I am just starting my tax and bookkeeping firm. My first potential client is an S-Corp with the owner taking a salary and distributions. I was concerned that he was just taking a small arbitrary salary and larger distributions at year-end. I now have the tools I need to confidently discuss the situation with him and, if he disagrees, to not accept him as a client. That’s a tough call for my first opportunity, but I am in business for myself to select only clients that I want to work with so it is a great learning moment. As I gain other S-Corp clients, I will be requiring your reports as part of the initial set-up for clients without salary documentation. I am looking forward to learning more on your site and appreciate the free tools. Thank you and I look forward to working with you and your company in the future. ~ K.G. Lester Prairie MN
I have a few S-Corp clients and wanted to be able to serve them better by offering this service. ~ S.N. Tampa, FL
I am in the process of starting a new bookkeeping and tax preparation practice and this information and support will be very valuable for me. Thank you for that ~ L.I. Durango, CO
Hello Paul, The reason I signed up to use your software is that I am beginning to incorporate tax planning into my practice. I believe your software will be valuable in setting clients up with an audit-proof S Corp. ~ T.B. Granite City, IL
The reason I signed up is because many business owners admit to being “financially illiterate” and – quite frankly – we in the CPA profession have not done much to help them in that regard. I want to make sure my clients know the difference between getting paid for “what they do” vs. getting paid for “what they own”. Nothing frosts me more than seeing an S-Corp tax return with 100% of the “profit” sitting on Officer Comp. That just tells me they have a lazy tax advisor. If I see little to nothing on that line and I KNOW they are owners/employees that also tells me something about their advisor (namely, get a new one!). ~ B.H. Saint Louis, MO
I have a few small (solo – no other employees) corporate clients who just don’t get it that they need to pay themselves a wage and I would like to better educate them. ~ F.B. Westfield, MA
Paul, I signed up because the S Corp compensation has been a potential issue forever and it seems likely that the IRS will be forced to do something about it sooner or later. ~ J.P. Gainesville, FL
Feedback from IRS and Treasury Agents who have taken one of our courses (more than 200 to date)
Excellent discussion on officer compensation. While I’m not in public accounting any longer the service provided is a great tool that I would’ve valued when having tough compensation talks with clients. Outstanding presentation. I’ve recommended the service to CPA’s I have worked with. ~ P.C. IRS Agent, Rochester Hills, MI
Great course on a subject that is very “gray”. I am a 26-year veteran agent with the IRS. ~ B.M. IRS Agent – Los Angeles, CA
As a Revenue Agent, the material covered in this webinar is very similar to training received by the IRS to perform my job. ~ J.T. IRS Agent – Downers Grove, IL
Again, many thanks to everyone who responded – particularly during this season of thanks and sharing. Have a wonderful holiday season!