Thanks you both for your thoughtful replies. I thought perhaps there was a method to determine how much of the income was business derived vs skill derived. For example, if I worked for a large appraisal firm I might earn a salary of, let’s say, $50k. The firm isn’t in business to purely pass along all the profits to labor, so perhaps they bring in $100k from my employment. Then they pay costs of employment (taxes, workers comp ins, etc). So they might make $15k for the risk associated with being the employer. My understanding was that the S Corp structure was to mimic this division and pay some % of the profit as dividends/non-salary.
Just to clarify my understanding, would you also say that all single employee LLCs should pay most to all as salary? (Lawyers, doctors, real estate brokers, financial planners, and so on?) Or is there something specific about appraisal?
Thank you again for your time!
