Hi,
How much is the reasonable compensation for S-corp shareholder. I started Dentist Practice in Anu-04 and I with my husband are the only shareholder in S Corp.
In the first year I have about 30k of loss and I am expecting to break even or make a marginal profit in 2005.
How much do you think should be the Compensation payable to me in 2004 and 2005
Also if you can give me some idea about th e future years when the practice will be Profitable.

How much you should pay yourself depends on a variety of factors, including what area of the country you are in, how much of the earnings of the company you generate vs. other employees, the profit of the company, and others.

However, if the company is losing money, you should be able to pay yourselves very modest, or even no salary. The IRS's concern is where there is a significant corporate profit and the shareholder salaries are very low.

What you pay yourselves once you're profitable will depend. The ADA probably has some statistics on salaries that would give you some idea of how pay yourselves. If the practice is marginally profitable (before your salaries), then modest salaries would be in order. If the practice is wildly profitable due to your and your husband's efforts, then significant salaries would be in order.

Gary

Zip Code: garyd@davisandbrandel.com