Bullet Proof Vest
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A Bullet Proof Vest for your Reasonable Compensation Figure
- May 1, 2013
- Posted by: RCR Admin Team
- Category: Blog
By Paul S. Hamann
Corporate law requires certain important decisions to be made by a company’s board of directors, such as setting the salary of its chief executive officer. In many S Corp’s the board of directors is under the control of the president or even consists of one person: the president. Under those circumstances, it is a little too easy to get sloppy in setting or changing the president’s salary based on the company’s cash flow without attention to corporate formalities. In a worst-case scenario, the sole shareholder/sole director/president takes whatever money he or she wants out of the company, leaving it to their CPA to figure out after the fact (usually when tax returns are being prepared the following year) how much to characterize as salary and how much as distribution.
