Best Accountants in Traverse City, MI

Do you own an S Corporation? Have you heard of the tax advantages and considered making the election?nnThe payroll bit can be pretty nerve wracking for owners accustomed to being a sole proprietor or a general partner. Understanding what the IRS expects of you should help make the whole thing less frightening.nnBasically the fed’s want to see you take “reasonable compensation”. Here is what they say on the matter:nn“S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.”nnThe IRS is given the authority to reclassify distributions as wages, so you really want to get this right. nnFirst, you want to determine what you did for the company in regards to the money it brings in.nnTo the extent the sales are generated directly from SERVICES provided by the shareholder, you will want to treat that income as wages.nnTo the extent sales are generated from SERVICES RENDERED BY EMPLOYEES or PRODUCT SALES, this can be paid out as a distribution. nnWhen determining a reasonable compensation, try to consider the following factors. nn✅ Training and experiencenn☑ Duties and responsibilitiesnn✅ Time and effort devoted to the businessnn☑ Dividend historynn✅ Payments to non-shareholder employeesnn☑ Timing and manner of paying bonuses to key peoplenn✅ What comparable businesses pay for similar servicesnn☑ Compensation agreementsnn✅ The use of a formula to determine compensationn.n.n.n.n.n.n.n.n.n#CPA #taxes #accountant #scorp #finance #macombcounty #puremichigan #detroit #madeinmichigan #metrodetroit #smallbusiness #budget #inspire #inspo #usa #knowledge #investment #growth #savings #kjoy #lifestyle #entrepreneur #businessowners #success #IRS #helpothers #businesslife #entrepreneurslife #freelancelife #expenseit...