Recent S Corp Expert Legal Chats

Does anyone have guidance on 'reasonable salary' for me, owner of a single member LLC, filing as an s-corp that does data analytics? My accountant has helped me set everything up, has said he 'doesnt do salary recommendations', so I basically have to give him a number. Online I read about '50-50', '60-40', or 'dont have payroll go below 40%' Initially, I was doing $50K payroll on $120K total income (payroll + owner distribution) I am now wanting to pay myself more so I'm proposing to bump it up to $80K payroll on $150K total income (payroll + owner distributions) Just wanted to see if this passes the smell test and if there's someone I can call for like a quick consultation to give me peace of mind on the numbers (since my accountant wont do this) In terms of 'reasonable salary' If I applied as a 'data analyst' that's like $80K/year, if I went back to working at a large tech company as a mid level manager, that could be $200k+ (but if I used that number, then that wouldn't yield any real advantage to using the scorp)

Dolan W.

Answered on Apr 2, 2025

Hello! My name is Dolan and thank you so much for contacting me! I just had a few quick questions for you: Where have you checked already to determine your reasonable salary basis? Have you looked online?

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I’ve filed for an LLC in Texas, and now I need to convert it into a subchapter S partnership agreement per IRS rules. I’m trying to make sure I do this right so I don’t mess up any tax stuff. Can you help me with this process?

Dolan W.

Answered on Dec 12, 2024

Hello ****! My name is Dolan, and I’d be happy to help with this. I carefully review each question and provide responses based on my years of hands-on experience as a lawyer. To get us started, let me clarify a couple of things so I can guide you more accurately: 1. Have you already obtained your LLC’s Employer Identification Number (EIN) from the IRS? 2. Is the LLC currently a single-member LLC (owned by one person) or a multi-member LLC? 3. What’s your primary reason for converting to an S Corporation-tax savings, liability protection, or something else?

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