What's a reasonable salary?

What someone in a similar role, industry, and market would earn for the same work. Document with comparable-pay sources (BLS, salary.com, RCReports).

When does an S-Corp make sense?

Generally once net profit exceeds ~$50–80k after expenses — the FICA savings need to outweigh payroll + tax-prep costs.

Can I take all distributions and zero salary?

No. The IRS routinely reclassifies zero-salary S-Corp distributions as wages and assesses back payroll tax plus penalties.

S-Corp Reasonable Salary Calculator

Model your W-2 salary split and see the FICA savings vs a sole proprietorship.

S-Corp reasonable salary

Annual business profit

Salary as % of profit (typical 30–60%)

How it works

Pick a salary percentage (typical 30–60% of profit, depending on role).
Apply 15.3% FICA (employer + employee) only to the W-2 salary portion.
Compare to SE tax you would pay on 100% of profit as a sole prop.

Assumptions

Salary must reflect reasonable compensation for your role and market.
Distributions are still subject to ordinary income tax — just not FICA.
Doesn't include payroll processing, state, or unemployment costs.

Frequently asked questions

Related calculators

Self-employment tax
Payroll tax
CPA fees

These calculators provide estimates for general planning only and are not tax, legal, or financial advice. Always verify with a licensed CPA for your specific situation.