What is an RCReport? An RCReport is primarily used for S Corporation business owners. It analyzes the job duties and responsibilities, using IRS approved methodologies to determine what the IRS considers a "Reasonable Compensation" for that position.
What is Reasonable Compensation? If you own an S Corporation and work in your business, the IRS states you are required to pay yourself a W2 salary, at the same level you would pay someone else to do your job. This is called “Reasonable Compensation.” The primary purpose of this law is to make sure you are not trying to avoid or reduce your payroll taxes.
Why does it matter? Tax fraud is serious and one of the benefits of being an S Corporation is the ability to take non-taxable. The Reasonable Compensation law was put in place to make sure S Corporation owners pay their fair share of taxes before any non-taxable distributions.
Why get an RCReport every year? Things change! Your business might grow, your job might change, or the rules might update. Getting a new RCReport every year keeps you safe and up-to-date, so you always have the right numbers if anyone asks.
Why now? IRS audits are going up, which means more business owners are getting checked. If you have a strong RCReport, you can show the IRS you did everything right. It’s like having a shield to protect your business and your money.
So, getting a Reasonable Compensation Report every year is smart. It keeps you safe, saves you money, and gives you peace of mind. If you want to make sure you’re paying yourself the right amount, let’s get your RCReport today!
