How good is your financial reporting system? Are you getting numbers on a timely basis? Are they accurate during the year or do you get caught with yearend surprises?

It’s important that you have a good system in place, so you can do some looks at the year early in the fourth quarter and make various adjustments that you might need to do in order to maximize your compensation and minimize any taxes. Here’s a few of the things to consider:

1. Compensation. How much more compensation could you be taking out of the company? Have you gotten past some of the FICA limits so that know more of that income is coming back to you rather than going out for FICA taxes?

2. Distribution. How much can you be taking out in distributions from the company over and above that you might need for distribution just to cover your share or income taxes? How much can you take out in distribution relative to the risks you have in the company as opposed to having to take it out as more compensation? For example, if you have a service business with very little in assets you probably will face having to take it out in compensation.

3. Distribution for taxes. Have you made adequate distribution to cover your expected tax liability if you are a sub-S corporation where you pay the taxes at the personal level based on your share of the corporate income?

4. Retirement spending. Have you maximized your retirement spending that you can take out? Have you paid yourself enough in compensation in order to be able to cover the limits, such as paying yourself around 165,000 in order to be able to take out the maximum allowed for the 42,000 or so in retirement spending, which is capped at 25% of your compensation?

5. Other payments. There may be a payment for other things, such as other benefits or expense reimbursements.

The key is to have a good financial reporting system in place that gets the number accurately and reports them fairly timely so you have plenty enough time to act on these numbers. Have a good system in place and then take a look early in the fourth quarter and make any final adjustments that you need to in order to maximize your compensation.