Owners’ compensation: Too much, too little, or just right?

Description

Abstract: The question of owners’ compensation is frequently debated in shareholder disputes, divorces and IRS inquiries. Owners’ compensation can vary significantly from company to company depending on whether owners take too much — or draw minimal salaries because they undervalue their contributions or because the business is cash poor. This article explains how a valuator can help a company estimate a range of reasonable replacement compensation that eliminates “owner bias” and adjusts income to a level that reflects economic reality based on objective market data.