S Corp Distributions We will not print a split.
No fixed share of profit is a wage. The wage follows the work, and the rest waits on basis.
A percentage is not a wage.
People love a split. Half for wages, half for the other cash. Or some other pair of numbers that made a friend feel safe. The split is easy to remember and easy to type. Work is not measured that way. We will not print the split, and we will not leave a sample beside the refusal for someone else to finish the arithmetic.
The wage follows duties, time, training, and what a similar role pays. Those are comparable facts. A ratio of profit is a fact about profit, not about the job. Two companies with the same profit can owe very different wages if one owner works every day and the other owner does not work at all. The ratio would have given them the same answer. That is why the ratio is the wrong tool.
We also refuse the reverse trick, a tiny wage and a large transfer, justified by the same split turned around. A thin wage beside a large transfer is the first question we ask, not a strategy we admire.
What we write down instead.
We write a short account of the work. What the owner decides. What the owner does with customers, with the bank, with the people on payroll. How many days that work takes. What training or history makes the owner the person who can do it. What a company would pay someone else to do that list. The wage is built from that account.
The account is a short page, not a novel and not a legal brief. The owner can stand behind it if a notice asks the question in plain language. If the page and the payroll do not match, we change the payroll while the year still allows it, or we say that the year already closed and the facts are what they are.
Comparables are described, not copied from a secret table. We do not publish a national average on this site, because an average without the job description is another ratio in disguise.
Profit still matters, just not as a split.
Profit matters because basis and the other cash live next to it. A profitable year can support wages and can add to basis. A loss year can make a large transfer harder to explain. None of that arithmetic needs a fixed share. We can talk about profit without dividing it on a napkin.
The K-1 and the bank still part company here. Profit can be allocated to an owner who took no cash. Cash can leave in a year the allocation is small. A split pretends those move together. They do not, and the return is clearer when we stop pretending.
If you came for the number, this is the wrong page, on purpose. Who should not hire us for a ratio says the same refusal in the form of a fit. Wages and basis are the two measurements we will do.
Ask us to skip the split.
Describe the work. Do not send a percentage you hope we will bless.
You will be talking to the Steven Palmieri practice.