Compensation packages must comply with the expectations of the government and of stakeholders, Steve Parrish writes. "Reasonable compensation" is set within tax law, and S corporation owners who take no wages and rely on distributions to avoid employment tax can be penalized by the Internal Revenue Service. Options such as deferred compensation and leasing property back to the company can be valuable. "[P]ay does not have to be as black and white as 'wages'. Get creative and get some advice," Parrish writes.
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