Reports & Methodologies

Benchmarks

Benchmarking provides an easy, data-driven way to generate a compensation range for each of your clients and are automatically generated for every client added to RCReports. Benchmarks are designed to provide a fast, directional compensation estimate, have a 90% confidence level, and are not fully defensible. For full compliance and defensibility a reasonable compensation report will still need to be generated for each S-Corp client.

CYA Compliance Report

CYA Reports provide a documented release of liability for the Tax Professional if their client chooses to go against their advice and forego the need to run a reasonable compensation report.

Cost Approach

The Cost Approach (AKA the Many Hats Approach) is the most common way to determine reasonable compensation. It calculates a reasonable compensation by determining what the replacement cost for each service a shareholder provides their business.

Market Approach

The Market Approach (AKA the Industry Standard Approach) compares the business owner’s compensation to the compensation of a CEO or General Operations Manager within an industry, location, number of employees, profit, and proficiency level. This approach is typically used at medium to large scale companies where the owner is primarily managing the company (not working within the company).

Income Approach

The Income Approach (AKA the Independent Investors Approach) requires only 4 inputs. Because of this the interview will open in your RCReports dashboard (there is no option to have your client input this data). To make gathering the required information as simple as possible you can download a paper version of the interview from the Resource Library located in the Tools tab and have your client fill it out.