Ask Maxi · Payroll
What is a reasonable salary for an S corporation owner?
What you would have to pay someone else to do your job. That is the whole standard, and it is the one the IRS applies.
In practice it comes from a few things: what the role pays in your area, how many hours you actually work in the business, how much of the profit comes from your labor versus from employees or capital, and what similar businesses pay for the same work.
Signals that a salary is too low: it is a small fraction of profit, it is below what you would accept to do the same job for a stranger, or it was picked to hit a number rather than to match the work.
There is no safe percentage, despite what the internet says. Sixty percent of profit is not a rule, it is a rumor.
Document how you landed on the number — a job posting or two for the same role, your hours, what the business does without you — and keep it with the year's payroll records. A defensible salary with a page behind it rarely becomes an argument.
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