When an S-corp nets $150,000 to $250,000 before owner salary, the reflex is to crank up wages “to be safe.” That’s not always necessary. Our firm applies an effort vs. capitalization framework that pegs wages to the owner’s actual labor and credits a fair return to capital and systems.
Used correctly, this approach can support a $50,000 W-2 wage for the owner while keeping the rest available for distributions, cash reserves, and growth.
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