What is a reasonable salary for an S-Corp owner?
Short Answer: A reasonable salary is what you’d pay someone else to do your job — based on your role, industry, and business profit.
The IRS expects S-Corp owners to pay themselves a salary before taking distributions. Too low can trigger scrutiny; too high can reduce tax benefits.
Common mistakes:
• Paying a salary that’s obviously too low
• Not documenting the rationale
• Taking distributions without payroll
What we recommend: Use industry benchmarks and document your salary decision
Still have questions?
If you’re not sure what applies to your situation, we can help.