Reasonable Salary Calculator
The IRS requires S-Corp owners to pay themselves a "Reasonable Salary" before taking tax-free distributions. If you set it too low, you risk an audit. Set it too high, and you lose your tax savings. Use this tool to estimate a defensible split.
Business Profile
$
Professional service firms must pay a higher percentage of profits as salary compared to businesses that rely on heavy equipment or inventory.
Suggested Salary Split
Total Available Profit: $0
W-2 Salary
(Subject to 15.3% payroll tax) $0
(Subject to 15.3% payroll tax) $0
Owner's Draw
(Exempt from payroll tax) $0
(Exempt from payroll tax) $0
Disclaimer: This calculator provides a rough estimate using the "percentage of profits" method. The IRS does not explicitly endorse a fixed percentage. To survive an audit, your salary must match what you would pay a stranger to do your exact job. Always consult a CPA before locking in your payroll.