How you pay yourself is one of the most consequential and least examined decisions in a privately held business. The structure, not the amount, is usually the problem.
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Most owners pay themselves by feel. The number gets set years ago and never recalibrated, which creates two problems at once. Tax leakage from a suboptimal salary and distribution mix, and distorted margin, because the true cost of the business is hidden by compensation that does not reflect what the role actually requires.
The structure, not the amount, is usually the problem. A buyer cannot tell what the business actually earns, and neither can you.KEYSTONE CONSULTING TEAM
A deliberate mix between reasonable compensation and distributions, calibrated to your entity, stage, and tax position, instead of a number chosen once and forgotten.
A structured retirement vehicle contribution that is deductible, aligned to your timeline, and not left to the end of the year scramble.
An accountable plan for legitimate business expense reimbursement, coordinated with your CPA, so reimbursements are clean and deductible.
Document what you take today across salary, distributions, and reimbursements, and compare it to what the role requires.
Model salary, distributions, retirement, and accountable plan options for after-tax outcome and margin clarity.
Work with your CPA to implement the new structure so it is filed correctly.
Compensation should change as the business grows. We revisit at revenue and stage milestones.
The measurable shift each engagement is built to produce.
Compensation structure is quietly one of the highest-impact decisions in a privately held business. It affects tax, margin, owner dependence, and how a buyer reads the business. Getting it right pays back every year and every time the business is valued.
Compensation structure feeds the Owner Wealth Assessment and the KODI, because how you pay yourself is often a signal of how dependent the business is on you personally, and it informs the KEV where defensible earnings depend on clean compensation.
This work directly informs the KODI Keystone Owner Dependence Index™, KEV Keystone Enterprise Value Index™.
Provider compensation structures that balance tax efficiency and practice economics.
See the anglePartner compensation that reflects utilization, realization, and firm stage.
See the angleReasonable compensation depends on your role, industry, entity type, and the market for comparable work. We benchmark against those factors rather than picking a number. Your CPA confirms it holds up to scrutiny.
It often does, by shifting compensation into more tax-efficient forms like distributions and retirement contributions. But the exact outcome depends on your entity and facts, so we will not promise a number before reviewing them.
At minimum annually, and whenever the business crosses a revenue or stage milestone, because the optimal structure changes as the business grows.
Entity structure, owner compensation, retirement vehicles, and Section 199A. Strategy only. We do not prepare
Explore serviceRetained earnings, owner draws, and reinvestment aligned to one plan, because business decisions and personal
Explore serviceThe Keystone Value Creation Assessment™ audits your last 12 to 36 months and gives you a written summary whether you engage us or not. If there is not a clear opportunity to create value, we will tell you directly.