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The 50% Rule
I met with a CPA recently, and she notes that auditing of an S Corp is pretty darn rare and she's never heard of a doctor being audited on this particular point. But she recommended that you pay yourself no less than 50% of your take home as salary and suggested a range of 50-70% of your take-home should be salary. The theory, she stated, was that some of your income is from being a prudent manager of the business and for taking on that business risk. But in emergency medicine, most of your income comes directly from your own patient care fees, not from other business income. I think if you were a family practice doctor with 3 PAs working for you and selling some supplements on the side, you could justify a lower percentage of your income being salary than a shift-worker like an emergency doc could. But the point is that whatever you pay yourself, you'd better be able to have some kind of data to justify that number if the IRS comes asking. When they do audits, they start with those people who pay themselves 0% in salary and work their way up from there.white coat investor